Indian Property News on 'April, 2009'

Nano Pushes Housing Sales in Kolkata

Nano has turned out to be a freebie option for real estate developers lookingto perk up housing demand. One Kolkata-based real estate company has decided to give the car “free” with a flat for its first 50 buyers. RDB Developers has booked around 50 Nano cars with Tata Motors for giving it free with flats in one of its residential projects in Sonarpur, South 24-Parganas. The realty firm has sold 24 apartments in the last two days, said Ravi Pincha, director, RDB Industries. “We have seen an overwhelming response for the the apartments, and have received more than 130 enquiries in the last two days,” he said. The company might place orders for more Nanos, said Pincha.

Spread over 50 acres, the first phase of the RDB project at Sonarpur will be over by December this year. With a project cost of around Rs 50 crore, the company is selling flats at about Rs 1,755 per square feet, with a 918 square feet flat costing about Rs 17 lakh. The highest price of the apartment is close to Rs 26 lakh, spread over 1,430 square feet. The price is higher than the prevailing prices in Sonarpur, which are varying between Rs 800-1,000 per square feet at present. RDB has put about 176 apartments in six blocks for sale in the first phase. In the months of October-November last year, several property developers had started advertising freebies to attract customers. However, with the sale of residential projects gradually picking up, not many developers are offering add-ons to attract customers. Read More »

Making Property Investment Simpler for Non-Residents

As property markets fall world-wide, one of the few consolations for real-estate investors is that some governments have become more open to nonresident property owners. A growing number of them are considering loosening or temporarily suspending foreign property-ownership restrictions in a bid to stimulate their real-estate markets. In January, for example, Beijing issued a one-year suspension of a one-year residency requirement for foreign nationals buying a house. The Cayman Islands and Australia have also recently loosened their rules. Meanwhile, the issue is being discussed in numerous other countries, including the Philippines. Loosening foreign-investment restrictions isn’t new. Governments have been attempting to stimulate foreign investment for years in response to swelling interest from international investors. In 2005, India began letting foreigners invest directly in Indian residential and commercial real-estate development. And in late 2006, the government lifted a required 10-year lock-in period on repatriating property sale proceeds, although it’s limited to $1 million a year.

Slumping property sales has given the issue renewed urgency, as countries strive to find ways to stimulate local economies. Last month, the historically foreign-investment-friendly government of the Cayman Islands temporarily lowered rates on their real-estate transfer “stamp duty” taxes, including a reduction to 5% from 7.5% on waterfront property. At the same time, the country’s real-estate brokers group, Cayman Islands Real Estate Brokers Association, announced a 20% rebate on commissions. The discounts last through Sept. 30. Restrictions on foreign ownership exist mainly in emerging property markets. Most Western European countries, including the U.K., France and Italy, don’t restrict foreign nationals from owning real estate. (Notable exceptions are Switzerland and Austria, which have established some foreign-buyer quotas to keep prices down in some ski towns.) The U.S. doesn’t restrict foreigners from buying property. Read More »

Real estate developer Parsvnath Plans to Repay Debt

Real estate developer Parsvnath Developers is planning to cut its debt by a quarter by the end of this fiscal, even as it has stalled 11 of its special economic zone (SEZ) projects. The New Delhi-based developer, which restructured Rs 800 crore of debt last year, plans to repay Rs 400 crore debt to banks and financial institutions. “Our mindset at this point in time is not to increase debt. We do not owe any money to mutual funds and most of the debt is project-specific.We have no commercial papers outstanding and we have discharged most of the non-convertible debentures”, said Pradeep Jain, chairman, Parsvnath Developers.

The company planned to repay the debt through internal accruals or from the large outstanding receivables in various projects, Jain said. However, he declined to specify the details of the receivables, except for saying that “our receivables are manifold”. Parsvnath’s current cost of debt is 12-13.5 per cent as compared with 11.5 per cent one-and-a-half years ago. The company does not have any short-term debt due for repayment this year. Parsvnath had plans to develop 17 SEZs. While it has acquired land for six, 11 SEZs have been put on hold. Another real estate company, DLF, has also sought de-notification of four of its IT SEZs due to lack of demand. Read More »

Jones Lang LaSalle Witnesses Growth in Revenue from Indian Market

Global real estate services firm Jones Lang LaSalle sees India’s contribution to its total revenues doubling to 4-6% in the next couple of years and said it will continue to invest in growth opportunities in the emerging markets. “We expect India’s…Share in our total revenues to double from 2-3% to 4-6%,” company’s President and CEO Colin Dyer said in a conference call with analysts.

The firm reported revenue of 2.7 billion dollars in 2008. Pointing out that the company has been growing in India both through acquisitions and organic investment, Dyer said the firm will continue to invest for growth in the country. “Over time, India and China will be a larger proportion of total world GDP as they will be a larger proportion of our business. We are superbly placed in both economies to pick up that growth over the next 10 years,” he added. Read More »

India Emerges as the 39th Most Preferred Retail Market World over

India is the 39th most preferred destination in the world for establishing presence in the retail market, moving up the ladder from the 44th spot last year, according to global real estate consultant CB Richard Ellis (CBRE). In its global report titled ‘How Global is the business of Retail?’, CBRE said the ranking, however, does not justify the size of the country’s economy. While UK topped in the global list, for the Asia Pacific region China headed the rankings followed by Japan, with India at the 11th spot.

“Since the last survey done a year ago, India has moved from the 44th position to the 39th position. This move however does not justify the size of our economy,” CBRE Chairman and Managing Director Anshuman Magazine said in a statement. He said even China has moved to the sixth position globally from 10th place last year. Among the Asia Pacific countries too, India is at the 11 th position, behind smaller countries like Singapore and Indonesia. Read More »

Key Suspect Arrested in Multi-Million DDA Housing Scam

Police Tuesday said they have arrested one of the key accused financers in the multi-million Delhi Development Authority (DDA) housing scam. ‘We arrested Jeetram Monday. We were looking for him for some time for his role in financing the scam,’ Joint Commissioner of Police (Crime) Amulya Patnaik told IANS. ‘He is among those who provided money to former DDA official M.L. Gautam. There are more financiers involved in the case and we hope they will also be arrested soon,’ Patnaik added. Over 500,000 people applied for 5,238 flats under the DDA housing scheme 2008. But the housing scheme got mired in controversies amid allegations of fake applications. The scam came to light earlier this year.

The Economic Offences Wing (EOW) of the Delhi Police, started investigations after a man who was allotted a flat in the draw of lots told the police that he had not even applied for a flat. Investigations revealed that a group of people conspired to buy several flats in the names of those from reserved categories like the Scheduled Castes and the Scheduled Tribes who were eligible for the flats but could not afford them. The conspirators meant to sell off these flats later for huge profits. So far the EOW has arrested Deepak Kumar, who allegedly blew the lid off the scam after he fell out with some fellow real estate agents, retired DDA employee M.L. Gautam, real estate agents - Raju Ram, Laxmi Narayan Meena and Vijay Pal. Read More »

LICHFL to Provide 560cr Housing Loan to Eastern Region

LIC Housing Finance Limited, a subsidiary of the public sector, Life Insurance Corporation of India (LIC)is targetting to provide Rs 560 crore home loan in the eastern region, consisting of east and north east states, during the current financial year. The target is Rs 160 crore more than the loan disbursement of Rs 400 crore achieved in 2008-09. The total loan portfolio of the company in the region reached Rs 1583 crore by the end of March, 2009 across 37,820 accounts, said AK Mahato, the regional manager of the LICHFL. In order to achieve the target, the company has opened two more Business Centers in the region. They are located at Berhampur and Cuttack in Orissa. With this, total number of Business Centers of the company in the state has increased to four. The company has 15 Business Centers in the entire eastern region.

The new office in Berhampur would cater to the needs of the customers of southern Orissa districts including Ganjam, Gajapati, Rayagada, Koraput, Kalahnadi and Kandhamal. Claiming the LICHFL is the second largest housing loan finance company in the country, the Mahato said, it has 126 marketing units across the country with 934 direct selling agents (DSA), 4865 home loan agents (HLAs) and 485 customer relationship associates (CRAs). The company is providing loans for homes, construction activities and corporate housing schemes. It also gives loans against rental income, property and to builders and corporates at nominal interest rate. Read More »

Further Correction of 20-25% Expected in Property Prices

Property prices have been on a slow but steady decline over the past year-and- a-half. Experts predict that this trend will continue and one can expect a 20-25 per cent further drop in prices in the next year or so. While interest rate cuts by banks have been comparatively faster in being implemented, largely through the consistent efforts of the Reserve Bank of India [Get Quote], the builder community has been reluctant to follow suit with ready price cuts, even when the uncomfortable truth remains that there is no choice in the matter. Though the initial interest rate cuts and a discounted interest rate for the initial year introduced by some banks resulted in a lot of loan transfers, new loans did not pick up pace on the expected lines.

Another fact that contributed to this factor is the prevalent grim mood of the job market. People are wary of taking on new debt liabilities while struggling to meet their existing commitments. Builders who had been concentrating on high income groups and premium housing needs are now stuck with incomplete projects and lack of funds. The builders, sensing the buyer’s mood, slowly started to relent and made attempts at slashing property prices. Prices have definitely started to slide in favour of the buyer. However, there have been several instances where there have been compromises over the square feet area of the house. Read More »

Real Estate Firms Plan Investment in ‘Recession Proof’ Education Sector

At a time when the biggies of real estate are divesting non core businesses, a clutch of mid-level developers are chalking up plans to invest in the ‘recession proof’ education sector. In the last one month, four real estate developers have announced plans of setting up business schools across the country with the combined investment exceeding Rs 500 crore. “It’s a natural progression for a real estate developer to foray into the sector which offers such a tremendous growth potential. There is a shortage of supply in the education sector which we feel we can successfully cater to,” says Pranav Ansal, Chairman, Ansal API.

With diminished demand for housing and a cash constraint, it’s a natural progression for many developers with available land banks. The Chennai based R. R Industries, Ahmedabad based Omega Realty, Delhi based Ansal Plaza and Kolhapur based Sanjay Ghodawat group are betting heavily on the `business of education’ to diversify their businesses; a model that has worked successfully in some countries like US and Canada. The Delhi based Ansal API plans to invest Rs 200 crore in next three to five years for setting up private schools, engineering institute across various centre in the country. The group has already tied up with e-learning service provider Educomp and has leased out its three operational schools in Gurgaon to Educomp. The realty major also plans to build school in townships being developed by them. Read More »

Real Estate can Revive in 6-12 Months- Parsvanath

The real estate sector has been bogged down by sliding prices and the tight liquidity situation. However, experts at a real estate summit in Mumbai believe that a revival will happen in the next six months. “There has been an increase in the velocity in sales, month on month,” said Kumar Gera of Gera Developers, also the president of the Confederation of Real Estate Developers Association of India (CREDAI), a realty body. “In terms of prices, I think we are very close to bottoming out,” Gera added.

Pradeep Jain of Parsvnath Developers said the liquidity situation for the real estate industry had improved but mainly due to new sales and internal accruals. “Financial institutions are still not lending,” he said. Jain said he hoped the real estate sector will bounce back in six to 12 months as there were enough signs for that to happen.