Indian Property News on 'September, 2009'

Real Estate Companies Target to Raise Rs 11,100cr through IPOs

The speedy turnaround in the stock market in the last six months has attracted a host of large real estate firms to tap the IPO route. Together four firms — Delhi-based Emaar MGF and Ambience, Lucknow-based Sahara Prime City, and Mumbai-based Lodha Builders are eyeing to raise Rs 11,100 crore from the market. All have filed draft prospectus with Sebi.

This sudden rush towards raising money from the market, to a large extent, is driven by the recent lessons the realty firms got from the financial crisis, a top official from the sector said. While the going was good, from 2005 till 2007, a host of realty firms had taken huge debt on their books but in comparison had very less equity money. This raised their debt-equity ratio to above 1:1 level. Read More »

GIC Housing Finance Offers Home Loan at Lowest Interest Rate

Home loans today pierced the interest rate floor of 8 per cent that the State Bank of India had set in February. GIC Housing Finance, a subsidiary of state-owned General Insurance Corporation of India (GIC), today offered home loan up to Rs 1 crore at a festive season discount rate of 7.95 per cent, making it the lowest in the country.

Although the details of the new scheme offered by GIC Housing Finance are sketchy, it is learnt that the interest rate of 7.95 per cent will be valid for a period of six months. After this period, the interest rate will be reset to the then prevailing base lending rate. Read More »

Surprise Boom in Patna Real Estate

The recent boom in the real estate market of Patna has surprised one and all. Notwithstanding global recession prices of commercial as well as residential properties have witnessed tremendous upward swing in the last couple of years. Patna was never known as prime destination to settle or invest for the people of other states largely due to lack of infrastructural facilities and absence of trade and industries in and around the city.

Even the original citizens of the city would love to move out and live elsewhere. “The real estate prices have appreciated more than 100 percent in last three years. Now the residential properties in the prime location are priced around Rs 3,000-3,500 per square feet whereas commercial space in malls varies from Rs 6,000 to 10,000 per square feet,” said a leading builder of the city, Rakesh Kumar Singh of Hope Frontline. “But this sudden rise can not be seen in isolation as the real estate was almost stagnant for more than a decade in Patna,” Singh added further. Read More »

Bangalore Emerging as Most Preferred Real Estate Destination

Bangalore has emerged as a clear preference for sectors like office and retail, while coming a close third in the residential and hospitality according to Cushman & Wakefield, a retail estate research firm. In its report Cushman & Wakefield GRI India Real Estate Investment report 2009: ‘Survival to Revival - Indian realty sector on the path to recovery,’ the firm said that Bangalore is expected to see the highest demand for office space in the period 2009 - 2013 with approximately 34 million sq.ft.

The expected recovery in the IT/ITeS sector would have a positive effect on the demand in Bangalore, the preferred location for many IT/ ITeS companies. The demand for retail sector is also expected to be the highest in Bangalore with approximately 7 million sq. ft. while demand for residential is expected to be approximately 570,000 units over 2009 - 2013, with the highest compounded annual growth rate at 14 per cent. The hospitality sector in Bangalore too is forecast to register the highest compounded annual growth of about 26 per cent in demand, followed by NCR at 24 per cent and Pune at 23 per cent. Read More »

Builders See Large Room for Growth in Office Space

Market for this predicted to grow at a compounded 19% annually for next four years. The glittering towers in the country’s commercial capital may still be rising into empty space, but that hasn’t stopped Rashesh Kanakiya’s ambitions from soaring. The chairman of Kanakiya Spaces has just launched a commercial project called — rather oddly, some would say — Boomerang, a 1.2 million sq ft complex at Andheri, a Mumbai suburb. Kanakiya says it’s the country’s largest single-project floor space on offer and a substantial part of that will be earmarked for offices.

The oversupply in the office space doesn’t worry him. “Though there is oversupply in the IT space, demand for office space hasn’t stopped. With international markets picking up, we expect demand to pick up from early next year. We have got an excellent response for our Boomerang project this week,’’ Kanakiya says. Kanakiya has put his money where his mouth is. His company has also just completed 215 Atrium at Andheri that offers office space of 300,000 sq ft, apart from a 300-room four-star hotel (Courtyard Marriott). The space has been sold out. Read More »

15% Hike in Residential Property Prices

The upswing has begun. Not only have the sales picked up, but the prices of residential property too have increased 5-15 % in the last couple of months. With a long festive season ahead, realty experts believe property markets could see heightened activity, provided developers desist from increasing prices of residential space any further.

“The festive season (September-December ) has historically been a buying period, with a large chunk of overall sales being converted during this auspicious time. Some developers see as much as 30-40 % of the yearly sales taking place during the festive season,” says Aditi Vijayakar, the executive director (Residential Services, India) of Cushman & Wakefield (C&W ), a global realestate consultant. “Residential prices have increased by 5-15 % from the bottom it made in the first half of the year. If the developers continue to raise the prices then the renewed demand and interest that is being witnessed will start to abate,” she cautioned while talking about the upcoming season which is also a source of attraction for the cash-rich NRIs. Read More »

RBI to Increase Cost of Funds for Commercial Real Estate

THE Reserve Bank of India (RBI) may step up its efforts to pre-empt another bubble in the local property market by increasing the cost of funds for the commercial real estate sector by up to 200 basis points. “We are looking at a hike in the risk weight to the commercial real estate (CRE) segment to 125% as a measure to ward off another bubble in the real estate segment and to ensure high credit quality,” said an RBI official who asked not to be named. Currently, interest rate on most of the loans is between 7.5% and 12.5%, depending on the credit rating of the borrowing company. The current move will make loans to this segment costlier by 75-200 basis points. Bank finance for land development is classified as CRE if the source of repayment would be lease rentals. The segment has started showing signs of revival after an earlier-than-expected recovery of the country’s economy from a demand slump.

The measure could affect the financial health of some of the largest real estate firms of the country, which were forced to sell land banks and projects to meet their cash requirements. A similar move by the RBI in 2007 had resulted in a crash in property prices. Though the central bank was criticised for the measure, the global financial crisis in 2008 proved that it was a step in the right direction. Till mid-November last year, the risk weight to loans secured by commercial real estate was 150%, which was brought down to 100% by the banking regulator to facilitate credit flow to the sector that was reeling under a demand slump. Read More »

Real Estate Regulator to ensure Transparent and Healthy Property Dealings

A draft bill on the much-awaited real estate regulator that will protect the interest of home buyers by ensuring a transparent and healthy real estate sector has drawn the ire of developers. “The government is trying to play nanny to the home purchaser,” said Kumar Gera, chief of the Confederation of Real Estate Developers’ Associations of India (CREDAI). According to the draft, a builder will have to register a project with the regulator before he can market the properties. For this, the builder will have to submit a documentary proof of land ownership and the mandatory licences to the regulator for registration.

Once verified, the entire information about the project will be available on the regulator’s Website that will be accessible to everybody. The regulator will also scrutinise the advertisements and names of brokers. This process will ensure the legitimacy and the viability of the project, ending the current practice of realty firms launching projects without land ownership or mandatory approvals that leads to buyers getting stuck with inappropriate or illegal projects. “The proposed law will protect home buyers from fraudulent builders,” said Ajit Krishnan, partner for real estate at Ernst & Young. Read More »

Govt Circulates Proposal to Get Real Estate Business under Regulatory Authority Control

The Indian government on Friday circulated a new law proposed to be enacted by state legislatures to bring the real estate business under the control of a regulatory authority and an appellate tribunal.

The draft of the model Real Estate (Regulation of Development) Act aims to regulate and control construction, sale, transfer and management of housing colonies, residential buildings, apartments and other similar properties by setting up a real estate regulatory authority. Such an authority will also rate promoters and real estate projects to improve the confidence level of both investors and consumers through a system of self-regulation, which may be based on the rating parameters developed by the National Real Estate Development Council or the Confederation of Real Estate Developer’s Association of India. Read More »

RE/MAX All Set to Commence Operations in Gujarat

After Jones Lang LaSalle and Cushman & Wakefield, another US based real estate organisation is now making inroads in Gujarat. RE/MAX India, a division of US-based RE/MAX International Property Group, is all set to commence its operations in Gujarat next month. The Delhi-headquartered real estate brokerage franchising company is currently identifying companies interested in buying broker-office franchises to operate throughout Gujarat.

According to Manan Choksi, regional franchisee owner in Gujarat, “The market for real estate broking services is currently fragmented and unorganised in the state. As there is a lot of migration in to the state, coupled with investments, we expect a compound annual growth rate (CAGR) of 20 per cent in the next 5 years. Besides, we expect to conquer 25 per cent of the brokerage transactions in Gujarat. We wish to employ the top 15 per cent of brokers in the state who are most productive. This will ensure the desired market share as we believe in ‘outstanding agents, outstanding results. Eventually, over a period of 10 years, we expect a 35 per cent market presence in Gujarat.” Read More »