Latest Property News on 'Real Estate Developers'

Economic Survey 09 Recommends Real Estate Regulator

Controversial regulatory reforms in the environment sector found their way into the Economic Survey too. The report recommended that housing and real estate sector be taken out of the purview of the central environmental clearances regime. It also recommended the creation of an autonomous environmental regulatory authority, which environment and forests minister Jairam Ramesh had made part of his agenda. Ramesh had earlier said the ministry was considering the creation of an environment protection agency that would subsume the role of the Central Pollution Control Board as well as the ministry’s regulatory sections. The Survey also recommended that degraded forestlands be handed over to the paper industry. The controversial proposal has cropped up several times in the past couple of decades and each time put on the backburner with stiff opposition from several quarters.

In the UPA’s previous tenure too, the idea was floated with the environment ministry proposing leasing government forests to the industry in a PPP model. But the proposal was put off though not completely abandoned. The paper industry has again reached out to the government pushing the idea. Read More »

CREDAI Demands Better Infrastructure from Kerala Govt

The Confederation of Real Estate Developers Association of India (CREDAI) has demanded the Kerala government to improve infrastructure facilities, mainly road connectivity, to enable them to set up budget apartments in rural areas in the state. “Lack of proper infrastructure facilities in the state is preventing the developers from taking up budget housing projects. The government must reduce the stamp duty and come out with incentives for the developers who are willing to construct budget apartments,” CREDAI chairman Kumar Gera told mediapersons on the sidelines of a function, organised to launch the Kerala chapter of CREDAI.

“The government must create infrastructure facilities mainly for an area earmarked as Special Residential Zones and hand it over to a consortium of developers to build budget apartments,” he said. Gera said that the launch of CREDAI Kerala would bring in best practices in the real estate industry in the state and it will help the developers to adopt a corporate approach to meet the ever-growing demands of home buyers and provide a transparent and ethical platform for the buyers. Highlighting the demands put forward by the CREDAI before the Centre, he said, the CREDAI had requested the Union Government to categorise dwelling units below 1,000 sqft as affordable housing and provide special incentives to it. Read More »

Real Estate India Awaiting Demand Spur

India’s real estate sector wants larger tax breaks for new homes, especially for the largely untapped, middle-income and cheaper projects, to spur sales. The housing sector, the largest revenue contributor by far for real estate developers in India, has been hit by slumping sales and falling unit prices as the country’s growth began to slow amidst the credit crunch. “The distress is more locally generated and more to do with property prices,” Raja Kaushal, executive director and chief operating officer of BNP Paribas Real Estate India. Duplicate service taxes need to be brought down for developers, while transaction costs need to come down for home buyers, he said.

Real estate companies such as India’s largest listed real estate developer DLF Ltd, Tata Housing, Puravankara Projects and Unitech have rushed to launch middle or low-income housing projects to drive cash flows amidst the liquidity crunch. The government needs to initiate public-private partnership in low income housing by providing land banks, available with the government, to the developers, Maharashtra Chamber of Housing Industry said in a note. It also wants the bracket for priority lending for houses increased to up to 3 million rupees from 2 million rupees. Read More »

CREDAI Submits Paper on Slum Development and Affordable Housing to President

Real estate body, CREDAI, focused strongly on slum eradication, slum prevention and providing affordable housing, during its meeting with President Pratibha Patil here. “During our meeting, CREDAI presented a paper to the President, giving its ideas on the three key issues,” Confederation of Real Estate Developers Association of India’s Vice-President, Dharmesh Jain, told PTI here today. Jain, who is also the Chairman and Managing Director of real estate major, Nirmal Lifestyle, said that with affordable housing assuming prime importance, CREDAI asked the President for some fiscal incentives to be provided for this segment. “Easy availability of credit would go a long way in facilitating affordable housing,” Jain said.

In fact, CREDAI has taken up the matter of availability of bank credit for real estate developers with the Finance Minister as well, he said. CREDAI also suggested to the President the setting up of a slum rehabilitation authority by each state. “Maharashtra is the first state to have taken some good measures in slum rehabilitation and learnings from Mumbai and Maharashtra can be shared with the other states,” Jain said. CREDAI has also sought a follow-up meeting with the President on the three key issues. “The President was very responsive to our suggestions,” Jain said.

CREDAI Seeks Stimulus to Pump up Affordable Housing

The real estate developers in the country are banking on affordable houses to come out of the current crisis which has worsened with a slump in demand from the IT sector. The Confederation of Real Estate Developers Association of India (Credai), the apex body of the builders in the country with over 4000 members, has sought incentives and tax relief from the government in the forthcoming Union Budget for affordable housing sector to encourage builders to take more such projects. According to Credai chairman Mr Kumar Gera, who was here for the formation of Kerala chapter of the association, the price for affordable housing sector in the has been found to be Rs 2700 per sq ft., which would include cost of land, construction, services and infrastructure. “ If we can construct houses 300 to 400 sq ft. then it be would affordable to a vast sections of people in the tier 2 and 3 towns at this price ,'’ he said.

The association has asked for special concession and tax relief for houses up to 1000 sq ft. and to provide the status of infrastructure developer for builders going for special residential zones in more than 20 acres for facilitating access of finance. Raising the tax relief limit to Rs 3 lakh, is another demand, which Mr Gera feels has elicited good response. Decline in the growth in IT sector from a level of 23 % to 17 % has been one of main causes for the meltdown in the realty sector, Mr Santosh Rungta, Credai president said. But in the last two months some positive signals have emerged with a rise in the demand for office space from telecom sector, he told ET. Read More »

CRDAI Demands Tax Relief to Encourage Affordable Housing and Slum Development

With the countdown to the Union Budget having started, the real estate industry body, Confederation of Real Estate Developers’ Association of India (CREDAI), has put forth recommendations on the twin themes of affordable housing and slum redevelopment. According to a press release quoting its President, Santosh Kumar Rungta, President, says, “CREDAI appeals to the government on the impetus to create and facilitate affordable housing. We are optimistic that our recommendations to the Central Government will be evaluated with utmost importance and will put affordable housing’ at the centre of public policy.” According to the release, the real estate sector alone can add 1-1.5 per cent to GDP if efforts are made to reduce the shortage in urban housing while moving towards a slum-free urban India.

CREDAI’s first recommendation is on offering fiscal incentives for encouraging “affordable mass housing” in the 300-600 sq.ft and up to 1,000 sq.ft segments, by providing subsidy in interest payable by the homebuyer. The Eleventh Plan has estimated an urban housing shortage of 24.7 million units, and almost all of which is in economically weaker sections (EWS) and lower income group (LIG) categories. “Home ownership is critical for this segment not only for economic reasons, but also for the health of the nation from a social perspective in terms of stability, law and order, education and employment.” The second recommendation pertains to slum redevelopment, wherein CREDAI advocates exemption of direct and indirect taxes to boost the ‘slum redevelopment’ initiative. The recommendation gains relevance as the Government intends to make urban India slum-free in five years. There are around 80 million urban poor living in substandard or unsafe housing conditions under the continuous threat of displacement. Read More »

Real Estate Company Unitech Raises $ 575 Million via Private Placements

Real estate major Unitech raised $ 575 million (Rs 2,800 crore) on Friday through placing shares with overseas private equity funds at Rs 81 per share. This clearly indicates the rising interest of foreign investors in the Indian real estate market. The company had a plan to raise only $200 million but as the demand from investors was huge, it decided to increase the issue size. According to a source, the total demand in the auction was for over $1 billion.

In the deal, the company will issue 342 million shares, which will expand its equity base by around 16.7%. This will bring down the promoter’s stake in the company to around 43%. However, following the conversion of warrants, subscribed by the promoter in May at Rs 50 per share for Rs 1155 crore, his stake will increase to 49%. The company had raised $325 million in April by selling 421 million shares to private equity funds at Rs 38.50 per share. A senior company official said that this was the last dilution of capital base of the company. The money raised on Friday will be partly used to repay the high cost debt of and partly to launch affordable houses in various regions of the country. At present, the company has a loan of Rs 7,800 crore. Read More »

PE Players Show Exit Route to Developers

Several private equity (PE) players, global and domestic, whose lock-in period in real estate investments are to end soon, are pressurising developers for an exit route. While some PE players are asking developers to go for an IPO at an SPV or a portfolio level, developers who are wary about going public are approaching other investors or even buying back stakes themselves.

Biren Parekh, Partner, (Real Estate), Ernst & Young, said, “Some developers delayed projects to get higher valuations in the booming market. Many PE players, especially at an SPV level, now want to exit and are asking developers for an exit route.” A fund manager with a US-based PE fund agreed, “While some developers delayed projects, time has been running out for us. Some clauses that formed the agreement allow us to persuade developers and ask them to give the returns agreed upon.” Read More »

105% Hike in Unitech’s Q4 Profit

Real estate company Unitech has posted a 105% jump in net profit at Rs 280 crore and a 48% rise in net sales at Rs 752 crore for the fourth quarter ended March 2009, supplemented by ‘other income’ of Rs 300 crore. This other income was generated from the company’s joint ventures in real estate and telecom sectors. It includes interest accrued on the capital deployed in the real estate JV and the telecom venture Unitech Wireless, besides the services provided by Unitech to its telecom joint venture, Unitech head of corporate planning R Nagraju said.

The services to Unitech Wireless comprised providing manpower as Telenor had still not hired people. Unitech had also lent around Rs 900 crore as debt to Unitech Wireless, 64% owned by Norway’s Telenor. Following the infusion of equity by Telenor, Unitech Wireless has repaid Rs 400 crore to Unitech. Unitech, which for months had been struggling to repay debt, now says it’s comfortably placed to honour its commitments to service debt, following fund raising through a qualified institutional placement and increased sale of mid and low-income homes. Read More »

Real Estate India on Recovery Path

DLF, India’s largest real estate company, announced last week that it won’t be selling many of its real estate holdings, which it had put on the block a few months back.

One reason assigned is the availability of credit now to the company. By January 2009, real estate prices in India had fallen down 25-35 % from their peak prices of 2007. However, now the residential land prices have slowly and silently recovered around 20% up from their bottom prices, to a level which is around 10% below their peak of 2007. Since a large amount of land price in India is paid in cash, there would be no official way to confirm this yet.