Indian Property News on 'August, 2009'

Realty Estate Developers Showing Interest in Land Acquisition

Following a slew of new launches in the affordable housing segment in the past few months, real estate developers in the country are once again showing interest in land acquisition. They are now also expecting “some price escalations” for residential properties, with easier liquidity and overall positive market environment in the second half of the year. “We believe developers’ appetite for land has increased, given easier financing conditions and availability of prime land parcels (which many developers do not have) at reasonable rates. Increase in both off-takes and unit prices has improved developers’ confidence to purchase new land, in our view,” J P Morgan analyst Saurabh Kumar said in a note to clients.

In recent deals, Indiabulls Real Estate won the four-acre Mantralaya modernisation project in Mumbai with a bid of Rs 1,376 crore. DLF Ltd, the country’s largest realtor, won a 350-acre plot in Gurgaon for about Rs 1,750 crore after two other bidders — Unitech and Bharti — were disqualified on technical grounds. DLF, however, still wants the government to ease policies to ramp up deals. “The overall demand is certainly firming up. All the developers have reduced property prices in the past so I don’t think any price hike can be expected in the near future,” DLF’s group executive director Rajeev Talwar told DNA. However, if demand continues to build up and supply gets restrained, the situation may lead to prices moving northwards. I think the government should ease the policies on giving clearances faster as that creates unnecessary delay in executing the projects,” he said. Read More »

Kolkata Real Estate Experts Suggest Sellers to Wait for Another six Months

While everybody is speaking about how good an opportunity it is to put in your money in real estate now, investors who intending to sell could do well waiting for about six more months to get some added advantage, say experts. “It depends on at what level they had entered. In another three to six months the market will be stable and input costs are anticipated to rise after that. Since there are no major projects that have been announced, there will be strain on supply. People should wait for at least six months before starting to sell,” said Pradeep Sureka, managing director of Bengal Park Chambers Housing Development Ltd. He added that ideally a twoyear wait would bring in maximum returns.

Debjani Mukherjee Sarkar, general manager — marketing of Bengal NRI and Varun Kathotia, director — marketing of Fort Group agreed. “In the past two months, the trend has shown that the market is picking up. The Bengal NRI, however, believes that people should wait for around six months to get an appreciation of about 10 to 15 per cent,” she said. “Land prices have not changed much and unless one can strike a very good deal, it is better to wait another four months before one sells a property,” Kathotia said. Some said in a couple of years, there would be major rise in property prices. “Those who had invested between 2005 and 2007, early 2008 had been the best time to sell off. At the moment, the market is slightly down and it is the right time to buy rather than sell. By 2011, there will be another 20 to 30 per cent jump in the market and that will be the ideal time to sell,” said Mayank Saksena, associate director of Joneslang Lasalle Meghraj. Read More »

Real Estate Sector Recovering Worldwide

There are strong new reports that the global real estate market is hitting the bottom and some impressive positive news is coming from real estate markets around the world. In the U.S., the real estate market has yet to hit the bottom, but at least it is very close. There are 2 factors that would determine recovering the real estate market. One is when job losses stop and new jobs are created and secondly when the real estate prices are realistic reflections of what people can afford to buy. The news that the real estate market is recovering based on recent sales doesn’t really reflect real recovery. What is happening is that people are buying houses at bargain prices. The value of sales is up and this is a good sign but still the real estate market would probably start recovering by next spring.

Around the world there is positive news in India where there is a huge demand of the population for real estate that is the main factor for the real estate boom–and also in the Middle East where the population growth in 10-15 years is estimated to triple. The European real estate market mirrors what is happening in the U.S. There are some signs of improvement in Africa and Latin America but not as strong as in Canada, India and China. The Canadian Real Estate Association reported that realtors sold 50,270 units sold via the multiple listing service last month. That’s an 18.2 per cent jump from a year ago. It also marked the first time sales had topped 50,000 in July. Sales of existing single-family homes jumped 55 percent in the 2009 second quarter compared to the 2009 first quarter. Realtors sold 18,141 homes in the second quarter. Read More »

Things Looking Good for Indian Retail Sector

FDI in retail must be allowed, insists Anshuman Magazine, CMD of CB Richard Ellis South Asia Pvt Ltd. “India’s retail trade is around $ 180 billion, which is almost 10 per cent of the GDP, employing more then 21 million persons. Policies should be more transparent and smooth, in order to attract foreign investors,” he justifies. “Like any other person who invests money, we need to understand that foreign investors will also expect returns. Perhaps the challenge lies in reassuring these investors,” he wonders aloud.

According to Dubai-based real estate consultant, Rajesh Bijlani, the news of retail chain IKEA putting its India entry plans on hold, indicates the prevalent scenario. “There is something in India’s policies and implementation that is keeping such major brands from entering right now, despite the fact that the economic indices are attractive to MNC brands,” he feels. “Many retail brands that have outlets in the UAE have shown interest in setting up operations in India, but little is actually working out in the near future, as compared to the potential. I guess we need to work out red-tapism and other issues that seem to be delaying the entry of these retail players at present,” he adds. Read More »

Indian REITs Losing Overseas Opportunities

In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.

REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. “The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate,” he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels. Read More »

ITDC plans to make Private Hotels, Realtors as Partners

Hotel-cum-tourism PSU, Indian Tourism Development Corporation (ITDC) plans to make private hotel companies and real estate players its franchisee partners. It launched the Ashok Alliance Scheme on Thursday, under which member hotels will be able to use the Ashok brand and benefit from the operational management expertise, marketing inputs and other resources of the ITDC Group. ITDC, in turn, would get 3% of the gross room revenues earned by these hotels.

The company has roped in two developers in Surat and Chandigarh, who will get to use the Ashok brand for properties developed by them. This will take the total number of hotels under the Ashok brand to 18. “We are in talks with a number of other real estate players and hoteliers to bring more hotels under the Ashok Alliance scheme,” ITDC vice-president Kuldip Verma said. Read More »

India widens foreign VC funds’ investment options

Indian regulators have opened the doors to foreign venture capital funds (FVCFs) beyond the select investment options they were being offered in recent times.

The decision, reflected in some of the communications between the Reserve Bank India and custodian banks of VC funds, could not only make life easier for foreign funds and widen the scope for their risk capital, but also boost foreign direct investment (FDI) in the country.

In the past one year, FVCFs, which were allowed to come in, were specifically told to stick to activities such as infrastructure, bio-technology, nano-technology, biofuel, IT-related activities for hardware and software development and a few other areas outlined by the government in the list of 10 sectors identified for tax benefits to VCs. Read More »

Bandra-Worli Sea Link Expected to Boost Real Estate Prices by 10-15 per cent in Surrounding Areas

It’s a classic case of infrastructural development boosting real estate prices.The Bandra-Worli Sea Link seems to be doing more than just easing the traffic flow from north and south Mumbai. Experts in the country’s financial capital say that there could be an increase of 10-15 per cent in property rates in surrounding areas. “The Bandra-Worli Sea Link will not only provide relief from the agonising traffic, but will also trigger a major crowd influx, which will affect real estate prices. South Mumbai will have high demand .There are indications of a 10-15 per cent hike in property prices and this may effect connecting areas. Builders who are already selling flats in the area would go for a price correction immediately, says Rajesh Vardhan, managing director, Vardh­aman Group, a Mumbai-based real estate development company. In the same breath, he says it is time for a Nariman Point-Worli sea link as well.

Bandra-Worli Sea Link is a Maharashtra state road development corporation project, constr­ucted by HCC, India’s largest engineering contracting company. The road hangs in between cable-stayed bridges on the two ends namely, the Bandra and Worli Cable-stayed bridges of 500 and 150-metre spans, respectively – with the highest towers soaring to a height of 126 metres, equivalent to the height of a 43-storeyed building. The sea link was opened for general public on June 29. Not everyone, however, shares the same optimism. Shreegopal Maheshwari, broker attached to Mumbai-based Maheshwari & Maheshwari, feels that it is too early to see an impact on property prices. “It is just over a month since the link was inaugurated. We may see the real impact in six months. Read More »

Realty Bosses Took Huge Salary Hike amid Slowdown Blues

India Inc was on a savage cost cutting drive in the latter half of 2008-09. Salary cuts and job losses became the order of the day. However, the big bosses of real estate companies of at least 4 major real estate companies such as Unitech, HDIL, Anant Raj Industries and Ackruti City took home nearly 2-10 times hike in remuneration compared to a year ago. An analysis of the annual reports of these companies shows that the salary hikes were greater in that fiscal when their businesses were caught due to economic slowdown. Wadhawans of Mumbai-centric Housing Housing Development & Infrastructure Limited (HDIL) are a good example.

Between Rakesh Kumar Wadhawan (executive chairman) and Sarang Wadhawan (managing director), HDIL paid them Rs 18 crore in salary and perks in the financial year 2008-09, 10 times more than Rs 1.72 crore a fiscal back in 2007-08. During the same period, consolidated total income of HDIL sank 27% to Rs 1,782 crore and consolidated profits after tax (before minority interests) took a harder 52% knock to Rs 677 crore. The stock price of HDIL fell over 80% to Rs 82 at March 09 end from Rs 500 levels in March 08. Read More »

Supreme Court Blames Influential People for Illegal Real Estate Construction

The Supreme Court today came down heavily on economically affluent people, bureaucrary and civic body officials for mushrooming illegal real estate construction in the country and ruled file notings by ministers or officials do not have any legal validity. “Economically affluent people and those having support of the political and executive apparatus of the state have constructed buildings, commercial complexes, multiplexes, malls etc. in blatant violation of the municipal and town planning laws, master plans, zonal development plans and even sanctioned building plans”, said a bench of Justices B N Aggarwal and G S Singhvi in a judgement.

“In most of the cases of illegal or unauthorized constructions, the officers of the municipal and other regulatory bodies turn blind eye either due to the influence of higher functionaries of the State or other extraneous reasons, the bench observed.”In most of the cases of illegal or unauthorized constructions, the officers of the municipal and other regulatory bodies turn a blind eye either due to the influence of higher functionaries of the state or other extraneous reasons, it said. Read More »