Indian Property News on 'December, 2009'

Poor Retail Demand may lead to Fewer Mall Construction in 2010

Mall supply this year fell short by 60%, as only 5.7 million sq. ft of space was delivered across major cities in India, according to the annual retail report by real estate consultant Cushman and Wakefield Inc.

Around 9 million sq. ft of expected mall supply for the year was deferred to the future, due to poor demand from retailers, says the report. Of the proposed 44 malls at the beginning of the first quarter (January-March), about 18 were delivered by the year-end. The overall vacancy rates for the major cities as of December was 17% compared with a 16.7% vacancy rate in December last year. Read More »

2010 can be brighter for Retail Sector

The year 2009 has been bad for the real estate sector, particularly for the retail sector. While residential real estate picked up in the last two quarters, retail has been seeing very low demand. According to a report by Cushman & Wakefield, of the 44 malls proposed at the beginning of the first quarter of 2009, just about 18 were delivered by the year end. A number of developers postponed mall projects in 2009 but with a revival of demand in the end of the year, 2010 is expected to see a number of mall projects getting back on track.

“The outlook for the retail sector in 2010 is looking brighter. The festive season has been good and has seen a lot more footfalls. As the market picks up, there will be a revival of demand for retail spaces again,” says Rajeev Talwar, executive director at DLF. Year 2009 saw fresh supply of 5.7 million sq ft of mall space. Approximately 9 million sq ft of mall space was deferred to the future, which is a reduction of 60%. Almost 80% of new mall space in Bangalore was postponed which meant the city saw a vacancy of only 3%. Read More »

Bank’s Retail Lending Declines

The tightening of credit norms for unsecured loans is showing. According to data, flow of personal loans declined 0.1 per cent in the year up to October 2009, as against a 15 per cent rise a year ago. The Reserve bank of India’s (RBI’s) definition of personal loans includes loans for housing, credit card outstandings, consumer durables finance by banks, education loans and advances against fixed deposits. Over the last five years, this segment, termed as retail lending by banks, was the main growth driver for most entities.

While lower unsecured lending was part of the strategy adopted by banks following the credit crisis, the demand for housing loans dropped over the last 18 months as buyers deferred purchases due to high real estate prices and uncertainty over income. While RBI India has not disclosed the latest numbers for credit cards and consumer durable loans, Deputy Governor Shyamala Gopinath said the contraction in these segments was continued. When RBI had last released the disaggregated data, in the year up to August 2009, credit card outstandings were lower by 14.3 per cent. Similarly, consumer durables loans had declined 16.7 per cent. During the year up to August 2009, the personal loan segment had seen a 2.3 per cent rise. Read More »

SBI Confirms Stability in Home Loan Rates

The State Bank of India (SBI) does not foresee any immediate change in lending rates. SBI chairman .P. Bhatt, who was in the city today, said the bank’s initiative in the home loan segment had helped both customers and real estate developers.

“We reduced the home loan lending rates to 8 per cent per annum and as a result developers and customers started returning to the market. Other banks were also forced to follow our footsteps,” Bhatt said. Read More »

Factors that Drive Real Estate Prices in India

What drives real estate prices in India? The factors vary from city to city. In most countries, the construction of a noisy airport may be reason for residents to flee, but in India, the prospect of Mumbai’s second airport coming up near Khargar is driving up prices. According to Gulam Zia, national director—research and advisory services, Knight Frank, the Navi Mumbai area — from Vashi to Panvel — is likely to grow faster than other locations in Mumbai.

This is primarily due to the expectation that the new airport could come up here in the next 6-7 years in addition to the trans-harbour link. The entire look of Navi Mumbai could change in the coming few years, as Kharghar and Nerul record multi-fold growth. Noida and Ghaziabad are coming up well due to the metro projects shaping up in the vicinity. There are plans to extend the metro network to Manesar as well. These are the areas that are emerging quite fast and good growth is expected here. Read More »

Unitech’s Plan to raise USD 700 Million in Convertible Bonds Overseas Runs into Trouble

Real estate firm Unitech’s plan to raise USD 700 million in convertible bonds overseas has run into trouble with financial regulators opposing a waiver of a three-year lock-in for such investments, a newspaper said on Tuesday. Despite the opposition from the Finance Ministry and the central bank, the Foreign Investment Promotion Board, responsible for approving such investments, would review the issue at its next meeting, the paper said citing a government official familiar with the development.

Unitech officials could not be immediately reached for comment. Unitech has argued the convertible bonds should be treated as debt until they are converted into shares.

NAREDCO Elects New Panel of Members

National Real Estate Development Council (NAREDCO), elected its new panel of members in an annual general meeting, held last week in the Capital. NAREDCO, an regulatory body established under the aegis of Union Ministry of Housing and Urban Poverty Alleviation claims to be committed to work for the development and promotion council for housing, real estate and allied sectors in India.

Rohtas Goel, CMD, Omaxe Ltd has been once again elected as the president of NAREDCO for the second consecutive time. During his last tenure, he undertook initiatives to extend the NAREDCO family in the states of Haryana and Punjab and in the closing run to mark footsteps in Karnataka, Andhra Pradesh and Madhya Pradesh. Read More »

NRIs and Home Loan India

Indians living abroad are equally eligible for housing loans from banks in India, but with some riders. Christmas and New Year see an influx of Indians based abroad. This year is no different. This time, though, the non-resident Indians (NRIs) are taking a closer look at real estate here. The correction in property prices has induced many, who aim to return to India in the near future.

An NRI is an Indian citizen, holding a valid Indian passport and staying abroad for employment, business or vocational purposes. According to the Reserve Bank of India and the Income Tax Act, an NRI can buy real estate in India and avail housing loans on residential properties from banks. They are only denied purchase of agricultural land, farm house or plantation property in the country. Calculation of eligibility and interest rate for NRI loans is not very different from that of the Indian residents. Read More »

Realty Estate Companies Hopeful of Growth in 2010

The Year 2009 has questioned the vulnerability of real estate investments. The belief that land is out of production and will never lose sheen was challenged. Not to mention that the global economic events had their fair share of impact on our markets as well.

The euphoria of the boom days had led many developers to scale operations to unsustainable levels, taking aggressive positions on the back of significantly high debt levels. The rapidly changing economic environment also put pressure on business margins and their ability to honour commitments both to lenders and customers alike. Several developers had to restructure businesses and exit non-core areas of business to keep liquidity concerns at bay. Read More »

Property worth More than Rs 250cr Destroyed Over Telangana Issue

As Andhra Pradesh boils over the Telangana issue, public and private properties worth over Rs 250 crore were destroyed by protesters in all the three regions of the state so far, government sources said. Adding the loss caused to businesses because of the seemingly unending spate of shutdowns in Telangana, the figure could be a few hundred crores of rupees more.

Of the total loss to properties, about 80 per cent was caused in Telangana region alone where people demanding a separate state have been more “violent,” the sources said. As many as 52 public and 28 private properties were burnt while 62 public and 114 private properties were damaged in the violence that broke out in Telangana region from November 29 to December 9, after TRS chief K Chandrasekhar Rao began his indefinite fast demanding separate statehood for Telanagana. Read More »