NEW DELHI: Realty firm Ambience today said it will invest about Rs 1,950 crore over the next four years to develop two luxury housing projects in Gurgaon and Noida.
The Delhi-based company will develop over 1,030 apartments in these two projects launched today.
Ambience has presence in Delhi and Gurgaon property markets. It is developing a 150-acre project ‘Ambience Island’ in Gurgaon that comprises premium homes, ‘Leela Ambience’ hotel with over 400 keys and a huge shopping mall.
In Delhi, it has a ‘Kempinski Ambience’ hotel comprising 480 keys and a shopping mall at Vasant Kunj.
“We are coming up two new projects in Noida and Gurgaon. We are entering into the Noida market for the first time,” Ambience group Chairman Raj Singh Gehlot told reporters here.
Asked about the investment, he said the project cost for both Noida and Gurgaon residential complexes would be about Rs 1,950 crore and would be financed through internal accruals, and loans from banks and HDFC Ltd.
That apart, Gehlot said: “In 2010-11, we had raised Rs 170 crore in form of equity in Gurgaon project from private equity firm Indiareit.” However, he did not disclose the stake divested in the Gurgaon project.
Ambience Group had planned Rs 1,300 crore initial public offer (IPO) in 2010-11 but had to shelve the plan because of bad market conditions.
Asked whether the company would revive IPO, Gehlot said “there is no such plan at this moment”.
Elaborating on the project, Ambience Director Aman Gehlot said the company will build 280 flats in the 3.5 acre Noida project ‘Ambience Tiverton’ at a cost of Rs 465 crore.
In Gurgaon, he said over 750 flats would be constructed on 14.5 acre project ‘Ambience Creacions’ at Rs 1,480 crore cost.
Ambience has fixed the selling price in both projects at Rs 9,000 per sq ft. The cost of the flats would be in the range of Rs 2 crore to Rs 4.5 crore.
The construction work on both the projects have started and the completion is expected in four years.
At present, Ambience group has about 1,000 acres of land bank, including 350 acre in Panipat where the company plans to develop a township.
BANGALORE/MUMBAI: After a lull of nearly three years, sale of large land parcels is picking up across the country amid a general improvement in sentiment on expectations that the new government will focus on infrastructure development.
Not only developers but private equity (PE) players, too, are keen on joining hands with builders to acquire land parcels at fair valuations without having to pay a premium as corproates try to unbolt the value of their real estate properties, inspiring the realty market out of its trance.
Some of the builders looking for sewing large land transactions include Tata Housing Development Company, Oberoi Realty and Runwal Group in Mumbai, DLF in Delhi, Prestige Estates Projects in Bangalore, VGN Developers in Chennai and Kolte-Patil Developers in Pune. Most of the properties on block are non-core assets, real estate and manufacturing facilities of corporates that can easily be converted to residential or office projects.
“Developers have access to liquidity and are putting war chest together in anticipation of high growth and conducive interest rate,” said Ambar Maheshwari, managing director of corporate finance at property consultancy JLL India. “Such transactions help corporates get money to put into expansion of their core business, while builders get access to clean land that is 30-50% cheaper than the market value.”
In July, Prestige Estates Projects bought an 8-acre prime plot of land in south Bangalore for Rs 345 crore from engineering and electronics conglomerate Siemens.
The deal was preceded by Mumbai-based Lodha Developers buying 87 acre in Thane, near Mumbai, from Clariant Chemicals (India) for Rs1,154 crore and Oberoi Realty’s 25 acre land purchase in suburban Mumbai’s Borivali from Tata Steel for Rs1,155 crore.
A crucial factor like toned down expectations of sellers is also prompting developers to consider deals, which would have otherwise taken longer to conclude.
“With outlook on economy looking positive hereon, we are looking at acquiring land parcels now as values are looking more realistic,” said Sandeep Runwal, director, Runwal Group. He, however, refused comment on the ongoing transaction of Crompton Greaves’ land parcel, for which the developer is believed to be one of the contenders.
Crompton Greaves is looking to sell its 32-acre land parcel in tranches. A stable government that is perceived to be quick in taking firm policy decisions has also boosted confidence of the developers.
“With a stable government in power, we are witnessing slow and steady recovery in the economy and should catch steam with festive season around the corner,” said Brotin Banerjee, CEO and MD, Tata Housing Development Company.
“We believe this is the right time for both consumers and developers to proceed with their purchase decision as these deals may vanish soon. We are utilising this opportunity to increase our footprint of quality land parcels in city centres of major metros as the demand will start picking with improvement in macro economy by end of this year.”
Tata Housing acquired a 7-acre land parcel in Thane from KEC International for Rs225 crore in April. Besides, the developer is looking to invest Rs3,000 crore in acquisition of more land in the premium home category across major cities in the current fiscal.
According to property consultants, over Rs3,100 crore worth of land deals have taken place in the last 6-8 months with similar amount of deals expected to be concluded in the next few quarters. “There is a revived optimism among realty developers,” said Rajeev Bairathi, executive director, capital transactions group & north India at Knight Frank India.
“They know that prices will move upward going forward. Therefore, they are clear about this being the right time to build inventory of the most important raw material for their business — land parcels.”
NEW DELHI: Real estate developers and property consultants today welcomed the RBI decision to cut statutory liquidity ratio (SLR), saying this would enable banks to lend more to industry, including cash-starved realty sector. However, developers demanded easing of interest rates to boost housing sales.
RBI today decided to keep the key policy rate unchanged but slashed statutory liquidity ratio (SLR) by 0.5 per cent to unlock about Rs 40,000 crore into the system.
“The RBI’s move to cut SLR by 50 basis points to 22 per cent will give banks more headroom to lend and thereby spur lending in future. However, the much anticipated cut in rates would have been more appropriate at this juncture,” Omaxe CEO Mohit Goel said in a statement.
Property consultant Cushman & Wakefield Executive Managing Director- South Asia Sanjay Dutt said the reduction in SLR clearly indicates that the central bank is keen on freeing up more money for lending, which is positive for realty firms.
In the absence of a clear direction of interest rate tapering, Dutt said the developers would be cautious in the upcoming festive season. “In our assessment, once interest rates come off its current levels, fresh demand will be generated for housing sales, leading companies to step up launches,” he added.
JLL India Chairman and Country Head Anuj Puri said the additional funds allocated in the hands of commercial banks through a SLR cut is positive for both infrastructure and realty sectors.
“As far as interest rates are concerned, the real estate sector will have to wait a little longer for a rate cut,” Puri added.
RICS, a global body for setting standards for property sector, MD South Asia Pacific Sachin Sandhir said: “Today’s announcement of keeping the key policy rates unchanged by RBI comes on expected lines. A low and stable inflation is a necessary pre-requisite for any rate revision”.
Sare Homes Executive Director David Walker said: “As expected the RBI has decided to keep rates unchanged as inflation remains on the high side of targets. This means no immediate relief for home buyers in form of cheaper loans”.
Lotus Green Developers Vice Chairman P Sahel hoped that the interest rates would be reduced soon and suggested that the industry should build on the momentum provided by the positive announcements in the budget last month.
MUMBAI: Until recently, real estate portals were used by home buyers to research on floor plans and price of apartments but builders are taking this process to the next level: you can now buy a home online.
With growing internet penetration, builders have realised the potential of the online space in selling homes and some have even tasted success. Mumbai-based Lodha group has generated over 100 bookings through its online portal for its new township project Palava in Navi Mumbai.
“We see the online space offering the potential for us to connect with consumers in new ways across the engagement cycle, from first contact to providing basic information all the way to bookings and sales,” says aspokesman of the Lodha Group.
Earlier this year, Tata Value Homes, a 100% subsidiary of Tata Housing, sold over 200 apartments across five of its projects in a fourday online campaign. It had earlier sold 50 homes online during the Google Online Shopping Festival.
“About 70-80% of the home search happens online which prompted us to take the next step and offer the option of buying a home online,” says Rajeeb Dash, head marketing services at Tata Housing.
“The exercise was targeted at not only the primary local market but also the NRI base which is more open to such transactions,” he adds.
Tata Housing has tied up with banks like IDBI to facilitate sales of homes online. A buyer can narrow down the apartment he wants to buy, pay an online booking amount of Rs 50,000 through credit or debit card and the house is allotted to him. The buyer can then complete further payments and formalities online or offline.
However, there’s a catch: buyers need to think twice before they make such a purchase as the online booking amount is not refundable.
“Buying a home is a high involvement decision so it will have to be a mix of online and offline model. That said, there is a small segment of buyers such as investors and NRI buyers who could complete the transaction online” says Sudhir Pai, business head at MagicBricks.com.
While online property buying is still at its nascent stage when compared to buying clothes, electronics or books, real estate companies have seen an uptick in web transactions of late. Buying a home online has several advantages, say builders.
Buyer cannot only see a large number of properties in the market, obtain details such as home values and asking price, but also search for a home in a specific neighborhood or area of choice.
A recent study by Google India showed that over 50% of real estate buying decisions are influenced by internet research and the phenomenon of researching online for real estate information was not limited to metros but also extended to buyers in tier-2 cities.
Nowadays, builders are more transparent and offer all the project details online, which eases the due diligence process for buyers, says Surjit Singh, president-marketing, RNA Corp. In its residential project, RNA Viva, the company has installed cameras at the project site which allows the buyer to check real time progress and updates of the project online.
As the amount of quality information listed on these property websites is increasing, the online business is expected to grow at a CAGR of 40-60% in the next five years, says Sandeep Singh, chief executive officer at Century 21 India, a real estate franchisor.
Builders anticipate the online space will play a major role in home sales. For them, it is one of the cheapest options to sell homes. “Typically, the online marketing spend for every 1,000 homes sold is around Rs 2-3 crore,” says Arjun Aggarwal, chief executive officer, Bhartiya City, on the investment in online space. Online housing portals are betting big on this trend.
“As the buying decision is moving online, we will soon see the ‘Add to Cart’ option even on realty portals,” says Advitiya Sharma, co-founder of Housing.com, a realty portal.
But buying a home online also takes the security risks to another level. “People need to take basic safeguards and verify the genuineness of the information as the transaction involves big money,” says Mudassir Zaidi, national director, residential agency, Knight Frank India.
NEW DELHI: Real estate developers have been buying more land from farmers over the past year than usual because of apprehension that the new law may raise cost of land acquisition significantly, even as they pin their hopes on the new government at the Centre to relax the proposed norms.
The land acquisition bill that was passed last year but is yet to come into force proposes to double the compensation for acquisition of land in urban areas while land acquired in rural areas will entail four times compensation.
The clause mandating consent of 80 per cent of land owners for a private project will delay the process of acquiring land and further increase project costs for developers.
“Companies have been buying land in their catchment areas as they fear that the land acquisition bill will make it more expensive and tedious to buy land in the future,” said Amit Goenka, chief executive officer of private equity fund Nisus Finance, which is currently working with developers in Mumbai, Pune and Bangalore to fund large land purchases.
Noida-based builder Supertech has acquired three different land parcels around Gurgaon totalling about 350 acres over the past year. “The new bill could raise prices of land in key areas where we want to operate and build projects. We had been acquiring land in the area for the last few years but we have increased the pace of acquisition in the last eight months,” said RK Arora, managing director of Supertech.
Real estate developer Chintels, which has large landholdings in and around Gurgaon, has acquired about 150 acres of land in the last one year. “There is certainly a concern around the new land acquisition bill,” said Prashant Solomon, managing director of Chintels.
Anckur Srivasttava, chairman of GenReal Property Advisers said that while the impact of the bill on commercial and residential real estate would be visible across the country it would be considerably higher in states such as Uttar Pradesh where land is acquired and allotted by the government. “The bigger impact, however, will be felt in industrial real estate for companies and for the infrastructure sector,” he said.
Real estate developers have seen home sales drop drastically over the past two years as property prices rose in a slowing economy.
Even as optimism has returned in the sector with the installation of the new government at the Centre, an increase in cost of land acquisition could dampen sentiment.
Several developers have therefore been raising money from private equity funds as well as non-banking financial companies to buy land in different parts of the country.
“Land acquisition will be a huge challenge once the bill is finalised. There will be a lot of speculation and there won’t be any price control, which will eventually push up property prices,” said Shyam Sundar Pani, president of industry body Global Initiative for Restructuring Environment and Management.
Developers are hoping that the government will dilute some of the provisions of the bill as it is reportedly considering. The rural development ministry is likely to suggest relaxation of norms including scrapping of the mandatory consent provision for public-private partnership or PPP projects and scaling it down in the case of private projects from 80 per cent to 50 per cent.
KOCHI: You have got some disposable amount, and want to own a real estate asset abroad. Now, it is possible as the Reserve Bank of India (RBI) allows resident Indians to remit money abroad for the purchase of immovable properties.
According to a new RBI directive, banks are allowed to remit up to US$125,000 (around Rs 75 lakh) every financial year for any permitted current or capital account transaction, or a combination of both. The money can be used for purchasing immovable property outside India.
Financial experts point out that the new norms might be helpful for the state as it would be easier for Keralites to spot properties due to their significant overseas connection. “The RBI’s decision to allow resident Indians to acquire immovable properties outside India is encouraging. Real estate has always elicited immense interest among Indians. So, relaxation of the norms will encourage them to remit more money outside the country.
The income from such properties will then find its way back to the Indian economy regularly, adding to the foreign exchange reserves,” said Promoth Manghat, vice-president, Global Operations, at UAE Exchange. The Liberalised Remittances Scheme (LRS), notified by the RBI, allows residents to acquire and hold shares, debt instruments or other assets outside India without the prior approval of the RBI. In August last year, the RBI had reduced the ceiling from US$200,000 to US$75,000 per person in a financial year.
“Real estate prices are yet to revive in many parts of the world, except in a few places. The new RBI norms came at the right time. Keralites, who have a considerable amount of disposable money, can now look at foreign countries to buy properties,” said G Sanjeev Kumar, financial advisor and managing director at Progno Financial Planning Systems Pvt Ltd.
“Though the limit prescribed by RBI is small Individuals in Kerala can now own properties over a period of time,” said Arun Kumar, a lawyer practicing in UAE.
NEW DELHI: As more Indians log online to seek information before entering into property deals, Internet today is estimated to be influencing decisions worth about USD 43 billion, search engine giant Google said.
According to a study commissioned by the US-based firm, over 50 per cent of real estate buyers’ decisions are influenced by Internet research.
“This phenomenon of researching online for real estate information before making a decision is not limited to metros but also extended to buyers in tier II cities,” Google India Industry Director Nitin Bawankule told reporters here.
The overall influence of Internet on real estate transaction value of both residential and commercial property including rentals amounts to USD 43 billion (USD 31 billion for residential and USD 12 billion for commercial), he added.
The primary reasons for researching online were easy access to in-depth property information and market trends (60 per cent), large comparison options (52 per cent), easy access to contact details of owners and developers (49 per cent) and financing and document processing information (43 per cent).
The survey, conducted by consultancy firm Zinnov across 15 cities in India included the metros, Pune, Lucknow and Ahmedabad with 6,196 respondents.
Talking about search trends on Google, Bawankule said the number had seen a 3x growth in the last three years.
“There is tremendous opportunity for both online real estate aggregators, brokers and developers to engage the buyers online by providing rich, meaningful and immersive experience to buyers on the Internet,” he added.
According to the study, 62 per cent respondents said aggregator sites (like makaan.com and magicbricks.com) were top sources of information for them on the Internet, followed by websites of real estate companies (52 per cent).
About 45 per cent said they visited broker sites, blogs and forums to find information before making a decision.
An increasing number of people are also using their mobile devices to search for properties online.
“Mobile queries (those originating from mobile phones) are doubling every year and about 40 per cent of total searches came through mobile phones,” Bawankule said.
Also, the study found 73 per cent respondents saying they prefer using their mobile apps for researching for property.
However, a major concern for people researching online was the lack of accurate and updated information.
Respondents said websites of developers and aggregators often lacked availability of in-depth information about property and features like easy price comparison.