Latest Property News on 'Real Estate Developers'

Real Estate may Gain Momentum Again

Reserve Bank of India’s (RBI) latest round of interest rate cuts together with the government’s fiscal stimulus package may prod some home buyers to return to the moribund housing market, but industry officials say the steps may not be enough to revive the market. Some developers say the moves do little to specifically address the realty sector’s main source of troubles credit flow to developers. The central bank on Friday reduced repo and reverse repo rate by one percentage point and banks’ cash reserve ratio (CRR) by 50 basis points, which is likely to enhance liquidity in the system and make lending to home buyers and developers easy and less expensive.

“Rate cuts will definitely have positive impact on demand for homes. RBI’s actions in the past have eased liquidity in the system, but credit flow to developers still remains an issue,” says Gera Developers chairman Kumar Gera, who is also the chief of real estate industry body Credai. Developers were expecting that the government would raise the limit on homes loans classified as priority sector lending for banks to Rs 30 lakh (three million rupees) from Rs 20 lakh now; and raise exemption limit for tax benefits on interest paid on home loans to Rs 3 lakh from Rs 1.5 lakh now. Read More »

Ranchi- Emerging Real Estate Destination

Jharkhand’s capital, Ranchi—which has derived its name from a Nagpuri word `Archi,’ meaning bamboo forest—stands out as perhaps the only city in eastern India that has a unique blend of contemporary urban culture along with resplendent, serene and picturesque warmth of nature’s beauty, besides of course a pleasant climate. The undulating hills surrounding Ranchi criss-crosses with little streams, tranquil lakes and brooks, presenting an awesome sight. The city may be rushing towards all the indicators of a modern city, but it has not lost its traditional touch. The total area covered by Ranchi - municipal area is about 110 square kilometers and the average elevation of the city is 2,140 feet above sea level. Earlier known only for its top-class mental asylums, Ranchi is now identified as Mahendra Singh Dhoni’s home town. It is a city of waterfalls, with a multiplex and a charming countryside, besides of course, a rich tribal culture.

No wonder, the erstwhile summer capital of unified Bihar, Ranchi is a beautiful city with tremendous potential to set itself on the trajectory of rollicking growth. The city has already registered a phenomenal growth in real estate sector ever since it became the capital of Jharkhand in 2000. “With many big companies having set up offices here, there is a boom in the real estate sector—both residential and commercial. But, land prices are high but plots are less,” says S.N. Singh, president of Jharkhand unit of Confederation of Real Estate Developers Association of India (CREDAI). Ranchi on the trajectory of rollicking growth. Photo: India Today. Simultaneously, Ranchi is also going gaga in terms of a retail boom. Biggies like Spencer, Reliance Fresh, Reliance Hypermart and Big Bazaar have already opened outlets in the city. One multiplex has opened and others are in the pipeline. A few five-star hotels are also set to come up in the city. Clearly, the average Ranchi resident living standard is bursting out of survival, and into consumption. No wonder, the income tax department also finds Ranchi as city with huge growth for generating revenues, which has multiplied three times since it became the capital. Read More »

Goldman Sachs buys Shares in Indiabulls Real Estate

Foreign fund Goldman Sachs Investments Mauritius (India) on Thursday bought shares worth Rs 30.84 crore in Indiabulls Real Estate through open market transactions. According to the information on bulk deals available on the National Stock Exchange, Goldman Sachs Investments Mauritius bought 20.89 lakh shares at Rs 147.64 per piece aggregating to Rs 30.84 crore.

In another bulk deal, Punjab National Bank has sold shares in media firm Pyramid Saimira Theatre worth Rs 76.60 lakh on the exchange. PNB sold two lakh shares of Pyramid at Rs 38.3 per share, the data stated. Shares of Indiabulls Real Estate today settled at Rs 154.80 up 17.81 per cent, while Pyramid Saimira ended at Rs 42.35, up 5.09 per cent on the NSE.

2009 can be Worse for Real Estate

Unitech is the worst performing Nifty stock of 2008 — the stock has crashed 92 per cent. Peer DLF hasn’t fared too much better, it has fallen 80 per cent while developers such as Parsvnath and Sobha too have lost 90 per cent. All in all, real estate has been the worst performing space last year with the BSE Real Estate Index giving up more than 80 per cent. Can the fundamentals of the sector recover in 2009? Unlikely.

The first half of 2009 is likely to be even tougher than 2008 as demand across segments —commercial, retail and residential continues to remain weak. Already, in 2008-09 so far, almost every developer has reported a fall in leases. According to a report by India Infoline,Unitech has more than 30 per cent vacancy on its portfolio held jointly with Unitech Corporate Parks and has managed to pre-lease only 18 per cent of the anticipated completions over H1CY09. The same report notes that cancellations have outweighed new leases at IBREL’s One Indiabulls Centre, since the REIT listing. Analysts expect rentals to fall further by 10-20 per cent in addition to the drop of 10-15 per cent already seen, given the subdued hiring plans of the IT industry and the high vacancies, coupled with lower rentals, could hurt cash flows, they point out. Read More »

Realty Face to Face with Reality

The five-year boom in India’s realty industry came to a crashing halt in 2008, following an acute liquidity crunch, falling sales and rising interest rates. The year, though, started on a positive note. The Dubai-based Emaar MGF raised $1.64 from the primary market in late January, and two motnhs later, Delhi-based realtor BPTP registered the country’s largest land deal, shelling out over Rs.50 bn ($1 bn) for 94 acres of land in Noida, on the outskirts of the national capital. But after that, the fairy tale run for the industry ended. As apartment prices shot through the roof, and interest rates soared, buyers turned away, which immediately hit sales. Subsequently, over the rest of the year, realty stocks began to get hammered on the bourses.

“Slowdown and higher interest rates started spilling over on the realty sector and the immediate impact was visible in realty stocks,” said Sanjay Verma, managing director of South Asia operations for realty consultancy Cushman and Wakefield. The realty index of 14 real estate stocks was the worst performer and slumped 80 percent, outpacing the 58 percent drop in the Sensex, the benchmark sensitive index of the Bombay Stock Exchange. As a result, valuations of realty stocks of even major developers such as DLF, Unitech, Omaxe and Parsvnath were greatly eroded. DLF, which had raised Rs.100 bn (over $2 bn) in June 2007 in what was then the largest-ever initial public offering (IPO) in India, saw its share value dropping by 79 percent. Read More »

Gain for DLF and Unitech

DLF Ltd. and Unitech Ltd. led gains in Indian developers after Housing Development Finance Corp., the nation’s biggest home mortgage lender, and State Bank of India lowered interest rates on loans. DLF Ltd., the nation’s biggest real estate developer, rose to the highest in two months, gaining 3.9 percent to 319.75 rupees as of 11:15 a.m. in Mumbai trading. Unitech, the second- biggest developer, gained 8.6 percent to 48.05 rupees, the highest in more than a month. The Realty Index of the Bombay Stock Exchange added 4.3 percent to its highest level since Oct. 21. The index has climbed 60 percent over the past four weeks, the biggest monthly rise since it was set up in July last year.

Mumbai-based Housing Development Finance said it is cutting its prime lending rate by 50 basis points to 10.25 percent for loans of up to 2 million rupees ($42,323) from today. The rate on loans of more than 2 million rupees was reduced to 11.25 percent. The central bank cut its key rate three times since October, to 6.5 percent from 9 percent, to increase borrowing by companies and individuals as the global financial crisis slows India’s economic growth. Read More »

Stimulus package May Provide Long Term Benefits to Realty Sector

The real estate scenario has changed completely since the beginning of ’08. Investor sentiment has turned negative and even genuine buyers are holding on to their purchases. This is an offshoot of declining affordability levels. High home loan interest rates, coupled with reducing loan to value (LTV) ratio , have adversely impacted end users’ ability to fund their purchases. However, all’s not over yet for this sector. The government could not ignore the fact that the real estate sector is the second-largest employer in the country. As a result, the Union government’s recently announced stimulus package, coupled with Reserve Bank of India’s (RBI) efforts, are expected to change the fortunes of the domestic real estate sector, which has been struggling to survive for the past six months.

The RBI’s move of allowing banks to provide special treatment to real estate companies is likely to result in long-term benefits. The proposed cut in interest rate on housing loans to 7% from 8% can trigger a strong uptrend in sales in the residential market, particularly in the mid-income housing segment. Measures such as according priority sector lending status to low-value loans, restructuring of loans taken for commercial property, and reduction in excise duty on input materials like steel and cement are all welcome steps. These come at a time when the industry is faced with a major liquidity crunch. They will certainly prove to be advantageous for companies facing working capital shortage.

RICS to Improve Professional Standards of Real Estate India

A prestigious estate agent’s group has announced a move into the Indian real estate market to improve professional standards.The Royal Institution of Chartered Surveyors (RICS) said it was launching in the country and had already appointed a regional boss for the project. The organisation said it hoped to help to “restore the largely and fairly fragmented real estate sector” in India.Founded in the UK in 1868 by royal charter, RICS provides globally-recognised qualifications for property professionals.

Louis Armstrong, RICS chief executive officer, said: “We look forward to welcoming Indian real estate professionals to the RICS network and assisting them in adopting international best practices.”The group added existing members of the Indian real estate sector have been appointed by RICS to form a review panel to oversee membership awards.Sachin Sandhir, managing director and country head, RICS India, said:“We will look to establish the RICS qualification as a benchmark for professionals working inthe land, construction and property related areas in India.”Links with Indian universities are also being developed in order to create education standards relevant to the property industry.RICS already has over 100,000 members in 146 countries, supported by a network of regional offices in every continent.

Unitech to Mobilise Rs 2,500 cr to retire debt partly

Reeling under acute financial crunch, realty major Unitech today said it will mobilise up to Rs 2,500 crore through sale of some assets and equity to retire part of its Rs 8,000 crore debt by March, 2009.”We are working on many options to raise funds,” Unitech chairman Ramesh Chandra said, adding it could be through sale of some completed projects or offloading equity at project level to private equity funds. “Debt is about Rs 8,000 crore. I feel that in another 4-5 months, we should be able to bring it to half. Disposal of assets could be anything between Rs 1,200-1,500 crore. Private equity will be another Rs 1,000 crore. And transfer of loans to telecom business will be about Rs 2,000 crore,” Chandra told PTI in an interview.

Unitech, the country’s second largest real estate firm, has forayed into telecom business and recently tied up with Norway-based Telenor to launch mobile services. Chandra pointed out that the company would have anyways dispose of its completed assets, but probably it would now be doing six months earlier.Giving details about sale of properties, Chandra said the company would mainly sell completed or nearing completion hotels and office buildings.He also highlighted that the company had always planned to exit from hotel business after developing it.”Hotels we anyway sell. In office, there are two choices, either you give it on lease or you sell it. So in current scenario, if you can sell it, that is better,” Chandra said.Real estate industry is currently facing slowdown in demand due to credit crunch and high interest rates on housing loans.

Banks to Provide Support to Large Real Estate Companies

India’s troubled realty firms may soon be thrown a lifeline, with the Reserve Bank of India indicating that banks consider providing support to large real estate companies. Recently, the regulator wrote to select banks telling them to assess the financial support given to builders and to finalise a workable solution, a senior banker said. The realty sector has been one of the worst hit after RBI raised interest rates last year to combat rising inflation. The tightening of interest rates, coupled with the economic slowdown, has resulted in a slump in home sales and commercial property development. Earlier, realty firms had raised money from the capital markets and through private equity, but since the start of the downturn, their funding sources have been choked.

Many banks have been reluctant to lend to this sector, given the risks involved. However, considering the knock-on impact that a slump in the real estate industry has on allied sectors such as cement and steel, the government is worried. Early last month, RBI had collected data from various banks relating to their funded and non-funded exposure to various real estate firms. This was followed by letters to lead banks of select real estate companies. Although RBI has not told banks explicitly to provide support to real estate companies, it has asked them to revisit the status of some of the projects.