Latest Property News on 'Property Prices'

DLF Signals Rise in Property Prices

Following the interest rate hike by a few leading banks and the government proposal to slap service tax on the realty sector, the country’s largest real estate developer DLF on Monday said properties would turn dearer as developers would have to pass on the service tax burden to end-users. “If the signal from the bank and government is to raise the price, then why prices will not go up? That means the economy is to ready take a price hike. It will be wrong to assume that developers should not raise prices. How can you have two contradictory signals?” DLF group executive director Rajeev Talwar said on the sidelines of a seminar in New Delhi.

While a few private sector lenders, including ICICI Bank and HDFC Bank, recently increased home loan rates by up to 100 basis points, the Budget proposed to impose service tax on the realty sector both on commercial rentals as well as on sale of under-construction housing units. The service tax would come to be about 3.5 per cent of the cost of the apartment that includes the value of the land and also the cost of construction, realty body Credai said. Read More »

Realty Prices to Increase from July

If you are planning to buy a house, grab it before July, as realty prices are set to increase later. The service tax of 3.3%, announced in the Budget, will be effective on your home from July as the amendments to the Finance Bill will be put into effect in June. Moreover, banks have decided to increase interest rates in the range of 0.25-0.5 percentage points on home loans, which could further be hiked in the forthcoming credit policy. Companies including realty majors like DLF, under the aegis of Delhi-based real estate body National Real Estate Development Council (Naredco), will soon approach the FM for a rollback of service tax.

The property prices are expected to go up with real estate companies passing on the additional burden to buyers. Effectively, someone buying a house property in Delhi will have to pay a service tax of 3.3% on the price of the accommodation and also a stamp duty of 8% as a sale of immovable property. The 3.3% tax will not include the amount to be paid towards special charges like garden facing or community hall facility as these charges will be taxed at 10% of the total charges. However, Sanjay Chandra, MD of country’s second-largest realty firm Unitech says an increase in interest rates is unlikely to affect the demand as the increase is only in trigger rates and hence there is no change in effective interest rates. Read More »

Wadia sells Four-Storey Commercial Building at Worli to Axis for Rs 640 crore

A new four-storey commercial building at Worli is being sold for Rs 640 crore, pitching it as one of the costliest in the country. The Nusli Wadia-led Wadia Group has finalised the mega deal with Axis Bank, which is planning to shift its headquarters to the building.

The deal generated a lot of interest in Mumbai’s property market and some sources in real estate circles had pegged the price at Rs 900 crore. But this was discounted by a senior representative of a leading financial institution who was said to be aware of the nitty-gritties of the transaction. The Wadias were unavailable for comment. A spokesperson for Axis Bank said: “At this point of time we do not have any comments to offer.” The building, Wadia Tower A, located in the Bombay Dyeing Mill compound on Pandurang Budhakar Road, has a saleable area of over 4 lakh square feet. It works out to Rs 16,000 a square foot. Read More »

Demand Boost may Pick up Realty prices

Home prices may remain firm or inch up slightly in metros such as Delhi and Mumbai and their suburbs despite an expected rise in interest rates as demand picks up once again on the back of renewed activity on the employment front, bankers and realty players that ET spoke to said. However, they felt that prices at extended suburbs — such as Greater Noida and Manesar near Delhi and Navi Mumbai, along with tier-II and tier-III townships — will remain under pressure due to over supply of housing, lack of connectivity and paucity of jobs in such locations.

The residential demand is not just the function of the interest rate, said Keki Mistry, vice-chairman and managing director of HDFC, the largest home-loan player in the country. “The demand is primarily driven by job creation and job confidence. When any individual buys a home, he or she enters into a long-term payment obligation. Therefore, buyers need to have confidence of retaining their jobs,” he said. The late-2008 and early-2009 realty crash was largely thanks to the fear of impending job loss in light of the financial slowdown, Mr Mistry said. “Given the robust industrial growth rate, it is apparent that jobs will be created and there would not be any scepticism on protecting jobs. This in turn would continue to fuel demand for homes,” he said. Read More »

Property Prices in Dubai Dropping Drastically

Property rates in Dubai are on a falling spree. Investors will have to wait 7-10 years for better returns, says an expert. Property prices in Dubai are dropping drastically. They may further decline by about 30%, says an expert. Real-estate investors will have to wait for 7-10 years to receive good returns. “There is an expectation of further reduction is property prices by 30% in Dubai. Prices are already one-third of their original levels,” said Pranay Vakil, chairman, Knight Frank India Pvt Ltd. He said, “A villa on Palm Island which was selling for 12 million dirhams about two years back is now available for 4 million dirhams and we expect it to go down to 3 million dirhams.”

The peak price for the blocks surrounding the Khalifa Tower reached $20,505 per square metre in 2008, while the current price has dropped by nearly 70%. Dubai’s relentless pursuit of growth received an unprecedented jolt in November, when its heavily indebted flagship holding company, Dubai World, announced plans to restructure loans worth $60 billion. Dubai World’s real-estate arm Nakheel was in the doldrums, after a 50% drop in real-estate prices forced it to ask for a trading suspension of its Islamic bonds. Dubai World has sought a moratorium on its debt obligations for a period of six months. Read More »

RBIs Move will Impact Developers Attempting to Hold on to Higher Prices

The Reserve Bank of India’s (RBI) recent move to discourage bank lending to the real estate sector may not have a clear cut impact on the ground, but the message is strong. With the Indian central bank ruling out another round of restructuring of real estate loans, those developers attempting to hold on to higher prices for their projects will have to revist their strategy, especially the highly-leveraged ones. RBI may want to prick any asset bubble in the making, but new launches may now take place only featuring developers pegging projects either at existing prices or at fairly reasonable rates.

However, the immediate impact of RBI’s decision would be on the utilisation of funds available with these companies. Developers such as DLF, HDIL, and Parsvnath, which have a huge debt pile, would be impacted. Though these players have raised funds through new project launches, asset monetisation and QIBs, analysts reckon that they would channel these funds towards debt repayment, although the primary aim is to utilise the funds for completing under-construction projects. Read More »

There is a need for massive reforms in Realty

Even as the domestic economy is showing clear signs of a pickup, the Indian real estate sector is not out of the woods yet as oversupply of residential and commercial projects will continue to haunt realtors for the next 12-18 months, DLF Limited chairman KP Singh said.

Talking to ET after being awarded the Padma Bhushan, Mr Singh said that the sector will witness consolidation and some players (fly-by-night-operators) may go down under as part of a normal business cycle. “I feel overwhelmed by a deep sense of gratitude and humility. I would like to express my heartfelt thanks to the Government of India for this great honour and for recognising my lifetime work. I consider it a tribute to all those who have supported us in the mission of building a new India. This is recognition for the entire housing and construction industry”, he said on receiving the honour. Read More »

Home Prices Bounce Back to 2007-2008 Level

Apartment prices at Planet Godrej, a premium residential property developed by Godrej Properties in the tony Mahalaxmi area of Mumbai, had come down to as low as Rs 17,000 to Rs 18,000 a sq ft in the property market slowdown last year. The flats now sell at Rs 27,000 to Rs 30,000 a sq ft — just short of the peak rate of Rs 32,000 a sq ft in 2007-08. It’s not the commercial capital alone that has seen real estate prices on fire. Last week, the Jaypee group sold 600 plots on the Greater Noida Expressway, near Delhi, within three days at Rs 36,000 a sq yd (one sq yd equals nine sq ft). Brokers say the plots are now available for only Rs 39,000 a sq yard and will touch Rs 42,000 a sq yard within a few days.

On Pune’s posh Bhandarkar Road, apartment prices have risen 80 per cent in just five months. For example, flats at local developer Avaneesh Construction’s housing project are now available at Rs 9,000 a sq ft, compared to Rs 5,000 in August. Welcome back to the era of crazy rises in home prices. After a year of sanity, when property developers were reducing rates even in premium areas, it’s a rewind to 2007-08, when prices had more than doubled in as many years on the back of strong buyer and investor demand, as the stock markets boomed. Read More »

Delhi Based Developer Omaxe Looking to Raise Rs 800 crore via QIP

Omaxe Ltd, the New Delhi-based real estate developer, is looking to raise over Rs 800 crore by March end through qualified institutional placement (QIP) of shares. It plans to utilise the proceeds for debt repayment and acquisition of cheaper land. The company is looking to appoint a couple of investment bankers by the month end to facilitate the deal. However, the name of the investment bankers could not be immediately ascertained.

The developer is looking to use Rs 400 crore of the funds raised to reduce its outstanding debt of over Rs 1,500 crore, according to an official. The rest would be used to invest in its housing projects, which includes affordable mass housing ones. Omaxe would also invest in its proposed township of over 3,601 acres at Bulandshahar in Greater Noida. It is expecting sales of Rs 7,500 crore from this project. Read More »

Real Estate can contribute 3-4 Percent towards India’s GDP- CREDAI

Given the affable atmosphere and right policies, the Confederation of Real Estate Developers’ Association of India (Credai) believes the real estate sector in the country could contribute around 3-4 per cent towards India’s GDP. Credai Vice President Getamber Anand maintained that with 300-odd affiliate industry and employment to nearly 30 million people majority of them illiterate, real estate sector in India held promise, provided the government supported it with the right kind of measures.

The commercial and retail sector, according to Credai, could take another two years before coming back on track and it would be the residential sector that could lead the revival for the real estate sector. Predicting a renewed growth for the real estate sector in 2010, especially the residential sector, Anand maintained positive sentiments returning back in the market and shortage of estimated 24 million dwellings units could give a kick start to the real estate that was bogged by the economic downturn. Read More »