Latest Property News on 'Property Prices'

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 »

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 »

Govt to Match Land Rates with Current Real Estate Price Scenario

The ground rent rates of the state-owned properties leased out by the government are way below the current market rates and need to be revised upwards in line with real estate price movements, the public sector auditor has suggested. A performance audit of the land and development office (L&DO) under the urban development ministry carried out by the comptroller and auditor general of India (CAG) reveals huge discrepancies between the value of the government land rented out and the ground rent receipts in the case of Delhi properties.

By extension, a similar situation should prevail in other cities as well. “Despite thousands of acres of land in prime locations with potential value ranging from Rs 1,18,000 crore to Rs 3,44,000 crore, ground rent receipts from these leased properties is relatively insignificant,” the report, submitted in Parliament on Friday, observed. While the ground rent receipts during 2008-09 was just Rs 92.77 crore, the report stated that leases falling due for revision during last three years alone could have fetched Rs 1,068 crore annually. At a time when the government is faced with a high fiscal deficit, this revenue foregone is significant. Read More »

India’s Real Estate Recovery to Drive Stocks- BofA Merrill Lynch Global Research

A recovery in Indian commercial property and rising home prices in Mumbai and New Delhi will boost asset values and drive real estate stocks next year, BofA Merrill Lynch Global Research said. The brokerage was reinstating coverage of the nation’s property industry with a “bullish” stance and has a “buy” recommendation for Indiabulls Real Estate Ltd., DLF Ltd. and Housing Development & Infrastructure Ltd., BofA Merrill Lynch analysts Unmesh Sharma and Gagan Agarwal said in report today. They have a “neutral” recommendation for Unitech Ltd., the second-biggest developer.

“Real estate stocks have experienced a sharp rally since March 2009 on the back of capital raising and increased sales volume in the residential segment,” the analysts wrote. “We expect commercial property and pricing to surprise positively, leading to the next round of significant net asset value upgrades.” Housing Development, the nation’s third-largest developer by value, has more than doubled in Mumbai trading this year, leading gains among the largest property stocks. The benchmark Sensitive Index, also known as the Sensex, has risen 80 percent, poised for its best annual performance since 1991. The commercial property market may only see the benefits from an increase in hiring in six months, according to today’s report. Investors are also “overly concerned” about oversupply as only 50 percent to 60 percent of commercial space being developed will be delivered on time, the brokerage said, citing trends over the past four years. Read More »

Godrej IPO Looks Overpriced

According to brokerage Bonanza the pricing of Godrej Properties look stretched and there are better opportunities available in listed space. “Pricing of IPO looks stretched, as bigger players in the listed space are trading at much better valuation. There are better opportunities available in listed space. However given the interest in Godrej group, listing gains may accrue,” the recommendation said.

Godrej Properties is a real estate development company and is based in Mumbai, Maharashtra. Currently, company’s business focuses on residential, commercial and township developments. It is a fully integrated real estate development company involved in all activities associated with the development of residential and commercial real estate. Godrej Industries currently holds 80.26% of Pre-IPO Equity share capital. Godrej Industries Limited is the listed flagship company of the Godrej group of companies.

Builders Expect Development in Commercial Real Estate Demand

Following the correction in commercial realty rates in metros by 20% to 40%, top builders expect sales to improve by 50% in Q3 and Q4 of 2009-10. In the first two quarters of the fiscal, sales of office space rentals grew 10% to 15%. To tap the growing opportunity, large builders in various metros are offering ready-to-possess offices, shops and commercial plots, and under-construction offices at 15% to 20% discount. The correction in commercial real estate rates comes at a time when the general sentiment is buoyant. There is ample cash flow in the market. However, the correction in the office space rentals is 15%— lower than that of the residential real estate sector.

According to Harinder Dhillion, vice-president (marketing) of Delhi-based Raheja Builders, “New Delhi followed by Gurgaon and Noida have witnessed 15% increase in sales of commercial space since the second quarter of this fiscal. As a result, we are planning to offer price discounts of up to 10% to 15% on office space rentals through our commercial properties based in Gurgaon.” Read More »

Throwaway Real Estate Prices in US Luring Indian HNIs

The throwaway real estate prices in the US have been attracting high net worth Indians in a big way. And now it seems, there’s more reason to look at investing in America for HNIs. The Obama administration has recently extended the regional centre investment programme, which is part of the permanent residency, EB-5 category by three years. Simply put, this programme allows investors a fast-track to US green cards and permanent residency. Under the scheme, investors who put in $1 million (about Rs 5 crore) into designated regional centre real estate projects and create at least 10 jobs in the US, are entitled to green cards along with their families. If they are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000.

The EB-5 programme is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the US. Many of the Gujarati hotel entrepreneurs also have strong family links in the US. “The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40% discount. This is definitely the time to buy as the US real estate market is slowly recovering,” says Sachin U Patel, managing principal of real estate development company American Life Inc, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett. The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest. Read More »