Indian Property News on 'September, 2009'

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.”

RE/MAX, among other things, brings the network support needed for real estate transactions by selling broker offices to provide a variety of real estate services. The broker-offices of RE/MAX provides guidance to both the buyer and the seller for a real estate transaction. The company plans to open 20 broker offices at the end of first year. “By the end of five years, we expect around 80 offices across the state. A country like Czech which has a population of 10 million has 155 RE/MAX broker-offices. Hence, Gujarat has a potential of around 200 offices in 10 years time,” Choksi added.

RE/MAX has opened its office at Mithakhali in Navrangpura area in Ahmedabad. Commenting on the growth of the company, Choksi further said, “RE/MAX Gujarat is investing Rs 3 crores in the next two years in developing the region. Moreover, the company will be spending a lot of money in branding and advertising. Internationally RE/MAX spends $ 1 billion (Rs 4800 crore approx) on advertising.” RE/MAX forayed into India a year ago and has presence in Bangalore, Chandigardh-Panchkula, Pune, Tamil Nadu and Kerala.

RE/MAX is an international network of independently owned and operated offices offering a variety of real estate services. Based in Denver, Colorado, RE/MAX International has presence in over 79 countries and has around 6850 offices, with 1,00,000 broker agents across the world. While Jones Lang LaSalle Meghraj set up its shop in Ahmedabad in July this year, Cushman and Wakefield is still to set up a office here. Both the firms have, however been operational in the state from past few years. Besides, another global real estate consultancy firm UK based Knightfrank has also been active in the state.

Housing Sector May Witness Fall in Prices: Knight Frank India

Global property consultancy firm, Knight Frank India, on Thursday said prices in the residential property segment are likely to decline in a short time. “We feel prices of residential segment may go down over a period of time,” Knight Frank India Chairman Pranay Vakil told reporters here today. The residential segment may see a robust demand in certain markets, he said, adding that it was also a good time for property developers to invest in land.

Demand for real estate at this stage is a combination of investor-led demand and end-user demand. While investor demand is due to shift in money from equity markets, end-user demand is due to increased consumer confidence and pent-up unmet demand from the recession period. This leads to a rapid increase in demand for real estate and a corresponding increase in property prices, he said. Today, property buyers are worried that prices may go down after they purchase property and projects may not be completed on time, Vakil said.

Knight Frank today launched a book titled Real Investment-a real estate investment guide for India. The book seeks to lend a helping hand by covering all the information that one may require while investing in real estate. The book compiles the perspectives of real estate industry experts to help deepen knowledge about real estate and consider it as an asset class. Commenting on the book launch, Vakil said, as property advisors, we continuously work with some of the best minds in the sector. We felt the need for a single credible source of information, for which we brought together the best minds in the business. This book makes the seemingly daunting task of delving into the real estate market simpler by offering tips on how to make real estate a lucrative investment option.”

Survey Rates Lodha Developers among India’s Top 10 Builders

Lodha Developers Ltd., India’s premier real estate developer, has been selected as one of the India’s top ten builders on the basis of a survey conducted by Construction World, India’s premier magazine for the construction sector for the past twelve years. The survey was conducted over a period of four months among a spectrum of handpicked audience comprising industry professionals from across India. “Our selection as one of the top ten builders in India by the Construction World is recognition to our standards of excellence in every aspect of our services and our presence in varied segments like high-rises to mid-income luxury, in the real estate sector,” said Mr. Abhisheck Lodha, Director, Lodha Developers Ltd.

Mr. Lodha received the award at a glittering function held at the ITC Grand Central, Mumbai, recently in the presence of Mr. Saugata Roy, Union Minister of State for Urban Development, Pratap Vijay Padode, Editor-in- Chief & MD of Construction World, ASAPP Media, Richard Marshall, Director of Urban Design, Woods Bagot and Atul Tandan, Chairman, ASAPP Media. Instituted by ASAPP Media, the award is recognition of exceptional work done by architects and builders in various aspects of infrastructure and real estate industry over the years.

Lodha Group is Mumbai’s premier real estate developer providing comprehensive residential and office space solutions across real estate categories and diverse consumer segments – from luxury garden residences in South Mumbai to large integrated townships in the suburbs, from thoughtfully designed office environments to private villa retreats.

RBI Asks banks To Assess Risk Before Granting Loan to Real Estate Companies

With some of the real estate companies having substantial investment in their subsidiaries, the Reserve Bank of India (RBI) today asked banks to assess the risk of the group as a whole while giving loans to these companies. “Some of the companies operating in the real estate sector have significant exposure in the form of advances, investments, etc. To their subsidiaries and other group or related entities,” RBI said in a notification.

As a matter of prudence, banks may meticulously assess the inherent group risk of their borrowal accounts falling under the purview of real estate sector, the RBI added. The central bank further said that while assessing the loan requirements of large builders or land developers, they may carefully analyse the financial credentials and viability of the borrowers supported by the position of the group.

The banks may also examine the financial credentials or viability of the relevant unconsolidated related entities such as Special Purpose Vehicles, it added. If the RBI advice is headed by banks, they will assess the risks associated with other interests of the real estate companies and may reduce the loans depending on the risk factor.

Jones Lang LaSalle Named ‘Best Overall Global Advisor and Consultant’ at Euromoney’s Real Estate Awards 2009

Jones Lang LaSalle (NYSE:JLL) has been named ‘Best Overall Global Advisor and Consultant’ at Euromoney’s Real Estate Awards 2009, announced this week. The firm also picked up another four global awards: Agency/Letting; Transaction Execution; Corporate Real Estate Services and Research in the Asia Pacific region.

Anuj Puri, Chairman & Country Head, Jones Lang LaSalle Meghraj, adds, “Asia Pacific is now an extremely critical market in the global real estate context. India, in particular, numbers among the few countries whose real estate markets hold real-time potential even as the global economy swims for firm land again. Any real estate market is only as good as its contingent of satisfied clients, and this recognition of our efforts in the Asia Pacific region stands testimony to the fact that we have been successful in delivering real value to our clients in both boom time and downturn scenarios.”

Colin Dyer, Jones Lang LaSalle’s Global CEO says, “It is a great honour for Jones Lang LaSalle to be recognised as a global and regional leader in the real estate advisory world, particularly as the Euromoney awards are voted by their readers from within the real estate industry. This success is testament to the quality, expertise and drive of our people, and the excellent service they provide to our clients globally.”

Cityland Technologies to Foray into Real Estate Consultancy

The promoters of Cityland Technologies plan to raise $6 million (Rs 29 crore) to fund the expansion plans of the company’s business process outsourcing (BPO) arm Cityland BPO as well as foray into real estate consulting. The company plans to raise $5 million as seed capital for its real estate services venture Cityland, which will be started sometime this year, said Srinivasarao Kanneganti, chief executive officer, Cityland Technologies. Cityland is currently in talks with a few private equity players and angel investors to raise funding for the venture, though nothing has been finalised yet, Kanneganti said. “We are looking for angels, VCs and private equity players who can fund our plans and also join our board in an advisory capacity,” he said.

Cityland.In, or Cityland Real Estate Ventures, is being conceived as a pan-India real estate network which will be run through the franchisee route. “The venture has the potential to create 30,000 jobs nationally. Through this, we will offer consulting services, market real estate, arrange fundingôcollateral for buyers, do title management and insurance management,” Kanneganti said. He said that in the event of the funding coming through, the real estate venture would generate about Rs 90 crore in revenues by March next year. Cityland BPO started operations in Bangalore four months ago with 20 people on its rolls. It currently operates a 100-seater call centre which serves telecom customers in the US, UK, Canada and Australia. “We have been getting business of Rs 1 crore per month so far, and expect to have 2,000 people on our rolls by the end of calendar 2010,” Kanneganti said.

The BPO arm’s activities have been focussed on operating customer helpdesks, transaction processing and business research for telecom companies. Plans are on to expand the services reach to BFSI and healthcare with emphasis in the areas of retail banking, insurance, credit card processing, mortgage billing and collections.

Millennium Spire to Invest in India Real Estate

Millennium Spire, the real estate investment arm of London-based Millennium Asset Management, aims to launch a $350 million-$400 million fund, by the fourth quarter of 2009, a senior executive said on Wednesday.

The new fund will invest in the Indian real estate sector, like Millennium’s first $60 million fund in the region, which was launched in 2007, Abhijeet Bhalla, managing director with Millennium Spire Asset Management told Reuters.

The asset manager was looking to expand its footprint to other emerging markets by investing the real estate sectors in Brazil, China and parts of Africa, Bhalla said.

Job Opportunities open up in Real Estate Sector

Some of the country’s largest real estate developers such as DLF, Unitech and HDIL have started hiring again, as they look to launch new projects and speed up execution of existing ones to cash in on a pickup in home demand. “We are launching new projects and plan to hire in large numbers,” said a spokesman for DLF, India’s largest real estate firm that fired more than 300 people during the downturn. He said the company hired people with specific skills such as mall management even during the crisis. DLF on Tuesday launched a project in Delhi and sold the entire stock of 1,250 apartments in two hours, he said.

The companies expect high demand in the coming fiscal quarters with the economy showing clear signs of a revival in the fiscal year started April 2009. The financial year ended March 2009 recorded 6.7% growth after two bad quarters pulled down annual growth rate from 9% plus levels seen in the previous three years. Unitech, India’s second-largest property firm that struggled for months to avoid bankruptcy, is back in action with two rounds of share sale and a revamped business model.

The company, which has 1,200 people on its rolls, has added 300 employees at different levels in the past few months. Its project sites, where construction had stopped for lack of funds last year, are again humming with activity, a company spokesman said. Unitech had raised $900 million through two rounds of stake sale to qualified institutional buyers to bring down its debt level, which was hovering around Rs 10,000 crore last year. The company also changed its business model and launched homes in the ‘affordable’ category and hired more people to sell directly to customers.

A revival in demand has prompted more firms such as Omaxe, Lodha, Ansal and Gera Developers to launch new projects, while some others like Parsvnath Developers and Prestige group are still playing it safe. Rohtas Goel, chairman of Delhi-based Omaxe, said he hired around 70 people, almost the same number the company had fired last year. “Much of the hiring will happen at mid-level and in sales and project management. These are the categories where maximum jobs were lost,” said Vivek Gandhi, senior vice-president with Delhi-based Ansal Properties and Infrastructure (API), which plans to hire at least 200 people in three months. He expects salaries to remain at levels marginally lower than those during the peak of boom in 2007.

The years between 2004 and 2007 saw Indian property market booming with hundreds of new projects being launched and property prices going up several fold. The boom and the resultant scramble for talent saw salaries in the sector shooting up. But a property slump, which started as a result of extremely high property prices and high interest rates early last year, deepened due to the impact of the global recession. This saw companies shelving several projects resulting in mass job losses at several property firms. “We offered an average 10% salary hike to our staff. The new people too are joining us on a scale similar to our old staff,” said Abhisheck Lodha, director with Lodha group that has hired 80 employees since August. The company, which has a 1300-strong workforce, plans to add 350 more in a year.

Another leading Mumbai-based developer HDIL is also hiring. “We require additional manpower as we are speeding up on execution of existing projects and planning to launch more,” said Sarang Wadhawan, managing director of the company. However, a few other players such as Delhi-based Parsvnath Developers and Bangalore-based Prestige group are still cautious. “We didn’t fire people in the first place and so don’t immediately need to hire new people,” said Prestige group director Uzma Irfan.

NCR Developers Expecting High Sales during Navratri

After a lull of almost six months, real estate developers are once again launching residential projects aggressively to cash on the Navratri festival, considered auspicious for property buying. The festival of Navratri comes after the Shraadh period, considered inauspicious in the Hindu religious calendar, when property buyers do not book houses. The interest from developers was so much that over a dozen residential projects by companies such as Parsvnath, BPTP and Emaar MGF were launched in the National Capital Region in the past week. DLF, the country’s largest developer, is launching the second phase of its Capital Greens in West Delhi on Tuesday. DLF sold 1,356 apartments under its first phase of the project in a single day in April this year, due to competitive pricing.

Emaar MGF, a Delhi-based developer, launched Emerald Floors Premier on Monday after it sold off Emerald Floors and Emerald Estate in the Emerald Hills integrated gated community project in Gurgaon. The same company launched plots and villa floors at Jaipur Greens on September 19, where it has sold 120 plots so far, while Parsvnath Developers also launched Parsvnath City at Saharanpur in UP last Sunday. According to property consultants, this year the new launches were double the number of last year’s Navratri launches, when the property market was in a bad shape. Home sales had fallen by over 50 per cent from the beginning of the year, and developers were offering freebies and discounts to sell their existing projects.

Though on a lower scale, Mumbai also witnessed a couple of launches of luxury projects in South Central Mumbai by companies such as Indiabulls Real Estate and Orbit Corporation last week. “Every day, we are seeing one or two launches and every developer is launching projects. Last year, most of them were selling old products due to the downturn. This year, we have a seen a slew of new projects during Navratri,”said Raminder Grover, chief executive of Homebay Residential, a unit of property consultancy Jones Lang LaSalle Meghraj. Consultants say the increased activity in home sales is giving confidence to developers to launch new projects. Residential prices have gone up by 15 to 20 per cent in the past six months or so, as developers sold projects which were aggressively priced and marketed.

“The last few months were indeed good for the residential market. There is an increased activity due to good launches and better pricing by developers,’’ says Anshuman Magazine, chairman and managing director of CB Richard Ellis, South Asia. Grover says that unlike last Navratri, developers are not giving any freebies and discounts, as they were confident of selling their products without any added attraction. Magazine adds that developers are selling homes with better amenities and designs to prospective buyers. “Though developers are marketing their products aggressively, buyers have a high level of awareness on the available projects. It is certainly a buyers’ market now,’’ said Magazine.

Uttarakhand Developers Confident of Real Estate Revival During festival season

The heavy slump in the construction business since early 2008 may have failed to recover fully. But builders in Uttarakhand said the market sentiments were likely to improve and spur demand in the festival season. They are now focusing more on residential business since there is hardly any improvement in the commercial space. With interest rate cuts by leading banks failing to boost real estate business in the hill state, which has taken a beating in the wake of the global recession and severe liquidity crunch, top banks like State Bank of India (SBI) and ICICI have already launched campaigns to cash in on the festival season.

“We are absolutely positive on the festival season,” said Maheep Kumar, DGM, SBI Dehra Dun, after launching the festival scheme ‘your dream home with SBI loan’. Experts in the business said that new investments were not pouring in the hill state as far as the real estate business was concerned. Only selected players have mustered courage to start new residential ventures in Dehra Dun. Commercial activities like five-star hotels continue to languish as a series of such projects are still hanging fire. Prior to the recession, new amendments in land laws, high stamp duty and circle rates brought by the former B C Khanduri government had virtually put a dampener on the property business in the hill state.

According to official estimates, there has been 27-30 per cent fall in the revenue from stamp duty and registries. In 2006-07, the revenue had jumped to Rs 342 crore but last year it fell to Rs 231 crore. This year also, there is hardly any recovery. Due to the slowdown, property rates fell by 5-10 per cent. Despite this, there are no buyers in the market. Virtually, people are keeping their fingers crossed with the hope that there would be a sharp fall in the property rates. The slump began last year when the Bharatiya Janata Party (BJP) government brought amendment in land laws that restricted outsiders from buying more than 250 sq mt of land. The move brought the thriving real estate business to a near halt.

Besides the tough land laws, the government also sharply increased stamp duty and circle rates that adversely affected the property business. But last year, the government implemented the master plan of Dehra Dun and had cut 1 per cent in stamp duty rates in its bid to boost real estate business in the state. But the move failed to improve the situation. Again this year, new Chief Minister Ramesh Pokhriyal Nishank reduced the stamp duty on agreement to 4 per cent in order to spur growth and announced other sops that would boost the real estate business.