Indian Property News on 'September, 2010'

SBI Extends Special Home Loan Scheme till Dec 2010

The State Bank of India (SBI), the pioneer of the special home loan scheme, has extended its special home scheme to December 31, 2010. “We did a cost analysis of our funds and realised that it is possible to continue with the special home loan scheme without being hit on our net interest margin,” a senior SBI official told Financial Chronicle. The special home loan offers loans at 8 per cent for the first year, and then 9 per cent for the next two years after which it will revert back to the floating rate of interest that would be decided by the bank.

The special home loan scheme has held SBI in good stead with the home loan book of the bank being the largest at Rs 74,669 crore with the loan book growing by Rs 3,476 crore sequentially over the fourth quarter (year to date figure). During the quarter, the bank disbursed Rs 4,660 crore of home loans. The reason why banks will like to continue with the special home loan scheme is to give a push to the credit growth, which is still sluggish. The credit growth during the year from March to date has been around 11 per cent, with sudden spurts of credit growth in certain fortnight.

SBI subsidiary State Bank of Hyderabad (SBH) on Tuesday reduced its home loan rate by 25 basis points. It will now offer housing loan at fixed rate of interest of 8.25 per cent for the first year as part of a housing loan campaign valid till November 15. According to the bank, this is a move towards giving continued thrust to the housing loan portfolio and to cash-in on surge in home buying during the festive season. Under this campaign, SBH will offer a fixed rate of interest at 8.25 per cent for first year, 9.25 per cent (floating) for second and third year for loans up to Rs 50 lakh. For loans above Rs 50 lakh, the bank will offer floating rate of interest at 9.5 per cent for second and third year.

From the fourth year onwards, the rate is linked to the base rate, which effectively works out to be 9.75 per cent for loans up to Rs 50 lakh and 10.75 per cent for loans above Rs 50 lakh at present. Further, SBH is also offering 50 per cent concession in the processing fee during the campaign. Bhagwathi Rao Sandilya, assistant GM (personal banking) at SBH, said, “We feel that existing market conditions are conducive for this campaign. During Dussehra and Diwali, there is a spike in home buying. Therefore, we want to cash in on this trend with the reduced teaser rate. However, we don’t intend to extend this offer beyond two months in the hardening interest rate environment. We expect housing loan business to the tune of Rs 300 crore from this campaign alone.”

According to Sandilya, SBH has over 1 lakh home loan accounts with a portfolio size of Rs 5,280 crore as of August 2010. The total business of SBH has crossed Rs 134,000 crore. The bank has a network of 1,218 branches.

Omaxe bags Mohali Project

Realty firm Omaxe has bagged Rs 70.4 crore infrastructure project from Greater Mohali Area Development Authority (GMADA) for highway and bridge construction.
Omaxe Infrastructure & Construction (OICL), a wholly owned subsidiary of the company, has got its first contract to construct Highway and three high-level bridges in Punjab from GMADA, Omaxe said in a statement.

The project is valued at Rs 70.4 crore, it added.
OICL will build an eight-km road in Mohali, Punjab along with three high-level bridges and culverts on the same road.
The project is expected to be completed in 16 months.

“This is our first venture in Highway construction. We are committed to the government’s vision of developing world-class infrastructure and this project will be a model for future projects,” Omaxe Group CMD Rohtas Goel said.
Omaxe group had recently bagged orders from Director General Married Accommodation Project, Ministry of Defence and Air Force Naval Housing Board (AFNHB) among others.

The total value of the infrastructure and contracting projects, including the recent contract, is about Rs 1,251.13 crore, it said.

Maytas Properties will have a strategic Investor Soon- Ved Jain

A suitor or a strategic investor for Maytas Properties will be finalised within a month or so, according to Ved Jain, government — appointed director on Maytas Properties Board. Speaking on the sidelines of Maytas Infra Ltd’s AGM, Jain said that efforts are underway to bring in a strategic investor and help revive the company, its business and projects. He refrained to make any further comments on the status of the company and its properties.

Property buyers in Maytas Hill County project, which is one of the marquee projects in Hyderabad, are still in a quandary about their future. The progress of this project was affected after the mega Satyam Computer scam broke out in January 2009. The company is faced with financial crunch with its accounts being frozen hampering progress of the project.

DLF Expecting Sales of Rs 8,500-9,500 crore in FY11

Driven by a resurgence in the commercial and luxury real estate segments, Delhibased DLF says it expects sales of Rs 8,500-9,500 crore in FY11, a growth of 20 per cent to 30 per cent over the previous year.

In 2009-10, the company reported sales of Rs 7,855 crore, down by 25 per cent from Rs 10,431 crore in 2008-09. With improvements in the real estate sector pan-India, DLF is now expecting to grow its top line year-on-year, but still below its peek of Rs 10,431 crore. A DLF official confirmed the developments.

While there have been no significant launches in the first five months, DLF is banking on a large number of new launches to meet its volume target of 15 million square feet across residential, commercial and retail categories. It has only achieved 13 per cent of the target till its first quarter results.

“DLF intends to be selective in launching new projects. Management said sales in FY11 would be primarily through existing projects (new phases of existing projects),” Bhaskar Chakraborty, analyst at IIFL said.

Developers Planning to Tap Capital Market

After an almost six-month lull, real estate developers like Oberoi Realty and Prestige Estates are planning to tap capital markets next month with Initial Public Offer (IPO) issues, according to media reports.
The exuberance in stock markets have prompted the developers, say bankers and analysts tracking realty companies. The last IPO in the real estate sector was in April this year, by Bangalore-based Nitesh Estates.

While Mumbai-based Oberoi Realty is planning to raise around Rs 1,100 crore through the IPO by diluting about 12 per cent, Bangalore-based Prestige is planning to raise Rs 1,200 crore and dilute higher equity in the public issue, said bankers involved.
At least a dozen real estate IPOs worth over Rs 12,000 crore are in the pipeline, with about half of theses, like those of Emaar MGF, BPTP, Lodha and Kumar Urban having already got the Sebi nod. There was also talk about some of these slashing the IPO size, but nothing has happened yet.

With most of these in the ‘wait and watch’ mode, given the earlier volatility in the markets, the success of Oberoi and Prestige could prompt others to hit the markets, said bankers. According to Vikas Oberoi, managing director, Oberoi Realty: “We have zero debt and good cash flows. We are confident of good response for our issue.”

Rahejas withdraw from Vadodara IT SEZ

Strength Real Estate, a Mumbai-based company of realty giant Raheja group has decided not to go ahead with its proposed IT Special Economic Zones (SEZ) at Vadodara. The SEZ was supposed to come over 13.74 hectares at Vamali in Vadodara district. The company recently informed the state and the central government about its decision to withdraw the SEZ proposal, citing “global downturn and withdrawal of SEZ benefits to under the Direct Tax Code”. The company is ready to surrender the land and associated benefits, a senior official in the department of Science and Technology said.

Another SEZ by the Rahejas set to come up over 27.85 hectares in Gandhinagar is on track. In 2008, in the midst of a global downturn, realty giant DLF too cancelled its IT SEZ at Gandhinagar. Both Rahejas and DLF were in the race for Vamali SEZ. However, Rahejas were given the nod for the project as their proposal was more attractive. The company bought land from the government as well as additional land at market rate. “Raheja group takes into consideration the environmental aspects while implementing any given project. The Vadodara SEZ project was unviable environmentally,” said sources in the Raheja group.

Company sources said, the land provided by the state government was unsuitable for their project, and hence the SEZ was no longer attractive. Although the company was given a Letter of Approval (LoA) on September 3, 2008, the project failed to make any headway. “Most of the projects are going well throughout the country. Hardware parks are working at brisk pace. However, some units are skeptical about the benefits that are likely to be withdrawn. Such projects are facing hurdles. The Vadodara SEZ is quite old so I have no clue why it has been cancelled,” said Ravi Saxena, additional chief Secretary, department of Science and Technology.

About 15 IT SEZs were approved in Gujarat and work on only three is in progress. These include Raheja’s Gandhinagar SEZ, Third Eye SEZ by Calica in Ahmedabad and L&T SEZ in Vadodara. Of the total 60 SEZs approved by the state government, 17 are for IT and ITES, 10 for engineering, four are for pharma, one each in the apparel and textiles sector and the rest are from other sectors. While three SEZs are functional, seven have been notified, 24 have received formal approval while 11 have been given in-principle approval. According to the state government (as on September 30, 2008) all the 60 SEZ will come up over a total area of 29,423.83 hectare.

Real Estate Developer Kalpataru to raise Rs 1,000-cr via IPO

Realty firm Kalpataru has joined the bandwagon of property developers that are planning to cash in the rising stock market and has filed the draft papers with the market regulator Sebi for the Rs 1,008-crore initial public offer. Kalpataru, the flagship real estate company of the Kalpataru Group, has filed the draft red herring prospectus with the Securities and Exchange Board of India, merchant banking sources told media. The Mumbai-based realtor would be raising Rs 1,008 crore through its initial public offering, sources said.

The company is considering to raise about Rs 200 crore as pre-IPO placement, a source said. The entity may offer some discount to retail investors and its employees over the IPO issue price, he said. The IPO is based on a 100 per cent book building process. Kalpataru is the latest entity in realty sector that is approaching capital market to meet its money requirement. A host of property developers such as infra major HCC-promoted Lavasa Corporation, Oberoi Realty and Sahara Prime City are in queue to enter the market.

Recently DB Realty and Godrej Properties hit the primary market. “Indian stock market is upbeat and no one wants to miss the opportunity. A host of companies are lined up to come out with their public issues,” an investment banker said. Kalpataru is focused on development of premium residential, commercial, retail, integrated townships and redevelopment projects primarily in Mumbai and Pune. It has also undertaking projects in other cities such as Hyderabad, Surat, Nagpur, Jaipur and Udaipur.

Kalpataru Group has interests in real estate development, property and project management, engineering, procurement and construction contracting for the power transmission and infra projects. Morgan Stanley, Citigroup Global Markets India, Collins Stewart Inga, ICICI Securities, IDFC Capital Ltd and Nomura Financial Advisory and Securities India are managing the IPO.

High Prices Making Home Buying a Pocket Burning Affair

While new developments continue to take shape around the periphery of metros, high prices in relatively prime locations make buying a home a mind-numbing, pocket-burning affair. However, there is also a select section for whom matters such as price and, possibly, even practicality are outweighed by the opportunity to flaunt their affluence. Catering to this rich set, global online auction platform Saffronart and real estate service firm Cushman and Weikfield have come out with their second ‘Prime Properties’ catalogue.

From holiday homes in Goa and Himachal Pradesh, to spacious apartments and bungalows in Delhi, Mumbai and Chennai, the catalogue is a choice selection of properties that would be any neighbours’ envy. While the first edition of the uber-luxury catalogue had seven properties listed, the Fall 2010 catalogue lists nine. Speaking to The Indian Express, Saffronart chief operating officer Nish Bhutani said, “Of the seven that were in our earlier catalogue, sales of four have been closed.” Saffronart, however, was not in a position to disclose which of the listed properties were sold. Sources said that sales of three properties, one in Mumbai and two in Delhi NCR, from the earlier listings are still being negotiated. The properties sold include apartments in Mumbai and Bangalore, besides an estate in Alibaugh and villas in Rishikesh.

While the price of the 6,030 sq ft duplex apartment in Belvedere Court on Spencer Road, Bangalore was Rs 4 crore, the 4-bedroom sea-facing apartment in the landmark Maker Towers on Cuffe Parade, Mumbai, had an asking price of Rs 25 crore. Apart from these luxury city apartments, two holiday destinations also found buyers. A holiday estate with two bungalows spread over a combined 10,000 sq ft in Nandaipada in Alibaug with an asking price of Rs 17 crore has ostensibly been sold.

Sources also said that all 27 properties listed under Riverside Villas project located near Rishikesh found takers. It is inferred that the actual selling price could have been higher than the asking price. Properties listed in the current catalogue include more reasonably priced (Rs 2.25-Rs 5 crore) holiday homes, including a designer villa, in Goa. Also listed is a 2,200 sq yd property in Chanakyapuri, Delhi. Obviously exclusive and hence not for the light-walletted, price for this property only comes when requested for.

NCR can Have 30,000 Acres of Land Available for Residential Construction

The National Capital Region (NCR) may soon have 30,000 acres of land available for residential construction, if the government’s steps in this direction bear fruit. The Centre is attempting to fast-track the resolution of disputes over NCR title deeds, which force developers to stay away. NCR is estimated to be short of 5 lakh housing units, and demand is growing at 1 lakh units a year.

The move will spark price correction, releasing over 2 million housing units. The exercise piloted by the urban development ministry and implemented by the NCR planning board, will be kicked off by year-end.

The exercise will unlock land in three states: eight districts in Haryana (Gurgaon, Rewari, Faridabad, Sonepat, Rohtak, Panipat, Jhajjar and Mewat); five districts of Uttar Pradesh, (Ghaziabad, Bulandshahar, Meerut, Baghpat and Gautam Budh Nagar) and one district (Alwar) in Rajasthan. The government plans to seek help from local bodies to identify and verify land ownership, after which independent agencies will cross-check data.

“This is good for developers who can get land and good for consumers who can get residential units at lower prices. But one has to see how it is implemented. India doesn’t have a very good history in implementing such policy initiatives. One also has to see how soon the free land can be made available for developers,” Abhishek Kiran Gupta, head-research, Jones Lang LaSalle, India said.

“In any big transaction, the problem of title deed arises at some point. We are trying to work out a formula. Various suggestions have come in. The exact strategy will be worked out in some time,” an urban development ministry official said. The ministry plans to advise states to create an ad hoc title deed in the name of the claimant to facilitate the transaction. “This should not be difficult as in villages and small towns, everyone is aware of who owns which land. The only problem in some cases is that official records are not available. This exercise will help do away with this problem,” said an official from the Haryana housing board.

CCI Orders Ad-Interim Stay on DLF’s Luxury Projects in Gurgaon

The Competition Commission of India has imposed an ad-interim stay on the DLF’s proposed luxury projects — Park Plaza and The Belaire — in Gurgaon. As per the order the real estate major has been asked not to cancel allotments of apartments and to refrain from creating third party rights in its place, according to a report published in Financial Express.

As per two separate complaints filed earlier this year by the Belaire Owners’ Association and Park Plaza Resident Welfare Association, the country’s largest real estate developer failed to deliver the residential flats on time by putting “discriminatory and abusive clauses” in its agreements with the allotees. The complaints also alleged that DLF was abusing its dominant position. Following the complaints the CCI had found prima-facie evidence of anti-competition thereby directing its director general office (investigation) to conduct a thorough probe.

According to CCI sources the informants had also appealed to the commission to impose an ad-interim relief order till the investigation was fully completed. “The members of the commission met and have ordered the ad-interim order to be imposed,” a CCI official said. When contacted a DLF spokesperson said, “We have not received any communication from CCI in this regard.” Section 33 of the Competition Act, 2002, empowers CCI to pass an order to protect consumers getting affected due to the long pendency of the litigation.

The two proposed projects are expected to be worth more than Rs 4,000 crore housing more than 2,000 flats with starting prices in excess of Rs 1.5 crore. The construction of the projects had started in August 2006 and was expected to be completed by end-2009, however the deadline has now been extended to April 2011.