Latest Property News on 'Real Estate Developers'

Indian realty not celebrating this festive season

The festive season is a great time for both the buyers and the developers. . However, this year is a testing time for the industry. In the tier II and III cities the situation seems to be challenging for most developers this year. Many developers are not officially reducing the per sq ft price as they may not be able afford it. But even those who can afford it may still not do it as it will send a wrong signal for his reputation and for the state of property market. The stigma attached to the property price reduction in the Indian market coupled with an on going slow-down may result into stagnancy. Considering that the sentiment may worsen further, choking the cash flow, he may opt for discounts to push sales in the current sluggish market. Most developers are now offering the reduced price under the disguise of incentives. Those shying away from accepting the correction are labeling it as ‘Festival-discount’. Those who are not yet open to this idea are giving away the discounts to the customers on the negotiating table.

Despite being an inevitable part of most property purchased, lending statistics have declined as banks are also hit by the slow down. High rate of interest has added to low turn out at the home loan counters. Now, a few banks have also joined the incentive band wagon. Many nationalized banks are charging 1 per cent less interest during the period of festivities and for selected projects only. Many are waiving off the 1 per cent processing fees as well. Some banks such as State Bank of India (SBI) have tied up with some developers to offer ‘Interest Subvention’. This means the buyer will be paying 2 to 2.5 per cent less interest on the loan taken during the first two or three years during which the construction is going on. SBI has already announced interest rate of 11 per cent and further declared 0.25 per cent reduction for selected projects for stipulated period of festivals. Read More »

Developers doing away with construction-linked plans

Real estate developers including DLF and Unitech are now introducing ‘time-linked’ payment plans for home buyers, thus replacing the construction linked plans. By doing so, buyers become prone to higher risk of late delivery of homes, besides facing an indirect increase in the cost of owning a home. Under time-linked plan, a developer gets assured money from a home buyer in instalments but is under no obligation to use that money in the same project to deliver homes in time.

It’s been a usual business practice for developers to divert sales proceeds from one project to another. During the real estate boom of the past five years, builders expanded massively by routinely using the proceeds of one project to purchase land elsewhere. Times have changed with the global financial crisis and realty firms are now facing major cash crunch, which is likely to worsen. Therefore, if they were to divert funds from one project to another now, it is likely that some projects may get stuck mid-way. Read More »

MCHI to organise real estate exhibition

Maharashtra Chamber of Housing Industry stated that it will organise a four-day real estate exhibition at Bandra-Kurla Complex here between October 9 and 12. State Bank and MCHI are organising the exhibition. This exhibition is expected to draw more buyers because the overheated real estate market has seen a correction. “The market had heated up by 200 per cent. A correction was overdue. Now investors have exited and end users are buying houses,” State Bank of India Deputy General Manager Arun Kumar Agarwal said. The demand-supply gap is estimated at 25 million houses, which is expected to go up.

At the end of 2007, the Planning Commission in its report had said there is a shortage of 24.71 million homes. The prices of commodities have come down by 30 per cent, MCHI President Pravin Doshi said. With the lean period of June, July, August, September behind, Doshi expects sales to pick up in the coming months. The exhibition would attract 85 real estate developers and 15 housing companies.

Jammu real estate industry growing despite turmoil

The turmoil in J&K couples with the slowdown in the country’s real estate sector has affected the industry in Jammu. There is stagnation in investments and a visible negative growth in industry and developers differ over whether the boom bubble will burst. “Agreed that the withdrawal of certain concessions (excise duty exemption) to the industry led to loss of capital, offering of government accommodation to the migrant Kashmiri pandits living in camps slightly impacted demand and general slump in trade during the agitation over Amarnath land followed by boycott of Jammu goods in Kashmir is hurting, but this is not going to impact the sector so greatly,” said property dealer Dinesh Kumar. “We have around a dozen builders and three of them have already tied up with major builders at the national level and some more are busy negotiating JVs.”

“There were some problems last year but I see the real estate witnessing a growth of around 10% this year,” said Nidheesh Builders’ head Murthi Gupta. “Growth of nuclear families, continuous migrations from the countryside and sustained flow of soldiers retiring from services will continue to maintain the demand for vertical housing, that despite being a new concept is gradually getting acceptability,” he added. Mr Gupta, who in the last 15 years has successfully built and sold many properties, said security, social dependency, facilities at affordable investments were helping the apartment culture to sustain and gain popularity. Many others think that restriction on Floor Space Index (FSI) in Jammu had acted as a deterrent for developing high-rise buildings. Read More »

Omaxe to set up chain of wedding malls

Real estate developer Omaxe group is setting up India’s first chain of wedding malls. The first five wedding malls are coming up in Gurgaon, Agra, Ludhiana and Patiala at an estimated cost of Rs 1,000 to Rs 1,200 cr. These malls will be a one-stop shop catering to all wedding-related needs of people, from designing and printing of invitation cards to buying honeymoon packages. The five malls will cover more than 9 lakh sq ft of space and the group plans few more in other cities.

Says Rohtas Goel, CMD, Omaxe Group: “These malls, besides all the wedding shopping, will also have banquet halls. The tenants will be a judicious mix of leading international and Indian brands and wedding-related service providers, including makers of bridal wear, clothing, jewellery, cosmetics, F&B, entertainment, decor, floral management, footwear, white goods, accessories, beauty parlours, wedding planners and leading travel agencies. The Omaxe wedding mall will take away the hassles of numerous visits to the market. The focus will be on maximising customer comfort and providing complimentary products under one roof.” The wedding market in the country is growing at a whopping 20% per year and now people are looking at hassle-free and comfortable weddings. Read More »

Omaxe Receives Rs 907 Mn Order For Building Township

Real estate developer Omaxe Ltd has bagged an order worth Rs 907.1 million rupees to build a township for Hindustan Zinc Ltd in Udaipur. Projects such as these are implemented going by the letter and spirit of the National Housing and Habitat Policy of 1998. That policy had envisaged the role of the Government as that of a facilitator and enabler, engaged in providing a level playing field to all market players through various fiscal, legislative and infrastructure incentives.

However, as the housing shortage in the country reached an alarming level over the years and the market dynamics resulted in exclusion of a majority of the population from satisfactory housing especially in the economically and socially deprived segment, the Government of India had to assume a more proactive role. The government acts through many of its agencies. For instance, Hindustan Zinc is a public sector undertaking and its order to Omaxe is an example of a democratic and free market economy operating in India. The Government has to intervene effectively in matters of policy and policing to ensure large scale availability of housing covering a wide range of people across the country. Read More »

FIRE Cap to develop affordable housing project

The $250-million First Indian Real Estate (FIRE) Capital Fund Ltd will be joining the affordable housing bandwagon. According to industry sources FIRE Capital is currently in the due diligence stage with the affordable housing investment. “The deal should get concluded within 2-3 weeks,” said a source. While, the name of the real estate developer has not been revealed, it is supposed to be a firm operating out of the eastern region of India. “In most likelihood, the affordable housing project is being developed in West Bengal,” added the source. The ticket size of the project will be between Rs 8 lakh and Rs 15 lakh across various permutations and combinations of apartment sizes.

Gautam Vashisht, executive director (investments), FIRE Capital Fund, said, “The intent is certainly there in the affordable housing segment in India, particularly in Tier II and Tier III cities.” However, he denied making any comment on the possible investment in affordable housing project in east India. Now with close to 80% of the corpus being deployed, the venture capital fund is planning to raise another fund next year. The amount to be raised is rumoured to be in the region of $500 million. While the primary investors will be from the US and European markets the fund will also look at raising some part of it from the Middle East. The second fund will also target real estate projects in residential and mixed-use developments (including hotels), and the focus will be on Tier II cities in the country.

No threat of realty takeovers

Indian developers don’t feel they are facing anything threat of takeovers despite the real estate downturn. In a scenario where most companies are heavily leveraged and that too at high interest rates, analysts say the smaller firms could be up for acquisition. “If the depressed market takes a longer time to rebound, then anything is possible including mergers and acquisitions,” says Anshuman Magazine, managing director, CB Richard Ellis. “Companies with high levels of debt may be forced to sell some stake to bigger players in order to survive.” Some industry executives suggest that if the downturn persists for some more months, smaller firms may be up for grabs. But others disagree with this view. Pradeep Jain, chairman, Parsvnath Developers Ltd. adds that developers who have the ability to hold on could manage to ride over the crisis even if they manage to sell one or two of premium priced projects.

Analysts point out that the real estate sector is suffering from high valuation expectations of promoters on one hand and the reluctance of fund managers to take exposures on the other. “Since many companies are currently trading at 30 to 40 per cent of their peak share price levels, the promoters are reluctant to divest. As a result, there is a huge gap in expectation and reality,” they added. The valuation dynamics have also undergone a major change. Developers are still looking at land bank and its value as the intrinsic value of their stock, while fund managers are looking at cash flow and the ability to deliver and sell actual products in the market in the next 12 to 24 months.

DLF, WBGEDC to develop first solar power project

The country’s first solar power housing complex is coming up at Rajarhat. An agreement has just been signed by real estate developer DLF and the West Bengal Green Energy Development Corporation (WBGEDC). A total of 200 acres has been acquired in Rajarhat by DLF for the project and work is expected to start soon. “The project has already been designed following specifications laid down by us for DLF. The idea was to build a complex that runs on green energy,” said an ecstatic SP Gon Choudhury, WBGEDC managing director.

The high-rise complex will provide housing solutions to all three categories - lower, middle and higher income - and contain 8,000 apartments. Photovoltaic cells will be fitted on rooftops, terraces, refuge areas, balconies and window panes to generate power. “Over the years, we have developed more efficient ways of generating solar energy. We will share this know how with DLF so that each tower in the complex is able to generate at least 40% of its total energy requirement,” said Gon Choudhury. Explaining how the remaining power requirement of the complex will be satisfied, Gon Choudhury said the complex will be fitted with a dual grid system. The power generated by the solar panels will directly flow into the grid, owned by West Bengal State Electricity Development Corporation Limited (WBSEDCL ) and this will be purchased by WBSEDCL at market price. That will then be registered as the complex’s own output.

Atlanta bags Rs 720.61 mn contract from Southern Railway

Real estate developer, Atlanta, announced that the company in partnership with ARSS had bagged a contract of Rs 720.61 million from Southern Railway. The contract is for conversion of railway gauge in the South Indian state of Tamil Nadu. The proposed earthwork between Tirunelveli and Tenkasi junction stations involves forming bank, cutting, re-grading, construction of major and minor bridges, construction of platforms, station buildings, passenger amenities, platform shelters, improvements to level crossings, providing lifting barriers etc. between Tirunelveli and Tenkasi Junction Stations.

Atlanta (Atlanta) is a construction, mining, infrastructure and real estate company headquartered in Mumbai. Its construction activities include the construction of roads, highways, dams and mass rock excavations.