Latest Property News on 'Real Estate India'

Jones Lang LaSalle Rated as Best Corporate Real Estate Service Provider

Jones Lang LaSalle has been recognised as the best overall provider of corporate real estate services by the Watkins 2009 Survey of Corporate Real Estate Service Providers. Of the 19 providers evaluated by the largest users of commercial real estate services, Jones Lang LaSalle was rated No 1 in every category, including delivery of results, adaptability of services, pricing, reputation and financial strength. “Real estate is often the third largest cost for many companies. Many are seeking to outsource these functions to reduce costs whilst maintaining similar or higher levels of service delivery. The Watkins survey is a clear indicator of what companies require and value,” said John Forrest, CEO of Jones Lang LaSalle’s Corporate Solutions business in Asia Pacific.

“It is a combination of these things that enable us to maintain our position as a market leader in Asia Pacific. In fact, we are continuing to grow and in the first six months of 2009, we have expanded our portfolio under management by over 30 million sq ft with clients from the banking, technology, industrial and consumer goods industries,” said Forrest. The survey, conducted every two years by the Watkins Research Group Inc., in a joint project with Flaspöhler Research Group, interviewed 204 corporate real estate (CRE) decision-makers from 182 companies, representing North America’s largest users of CRE services—including 59 Fortune 500 companies, 37 Financial Times Global 500 companies and eight government agencies. Read More »

Pune Builders Extend Help to Conserve Water

Real estate firms in the city said on Thursday that they would not use water from Pune Municipal Corporation sources for construction purposes. A circular issued by Satish Magar, president of the confederation of real estate developers’ associations of India (Credai), Pune, said, “Our general practice is not to use the PMC water for construction. In fact, builders do not get the permission to do so. However, in case there is an odd case where such a situation exists, we have passed a resolution asking members to ensure that construction activity does not impact the city’s water supply.”

Credai has also asked its members to defer non-critical construction activity to help the citizens’ water needs, the circular said. Magar said in the circular that Credai members have decided to do their best to help the city which is facing water crisis. “Our members will not use any water from the PMC resources but use our own borewells or water from the Sewage Treatment Plants for our construction needs and even in our projects,” Magar said, adding that the members have also shown willingness to make their excess water available with the PMC for making it to areas surrounding such water sources.”

ECB Policy Has no Short Term Benefits- SEZ Developers

Real estate players on Wednesday hailed the Government’s decision to open the external commercial borrowing (ECB) window for special economic zone (SEZ) developers, although some players felt that the move may not offer immediate gains given the global economic downturn. Reacting to the latest changes in ECB policy, real estate major Unitech said that while the move was “positive”, it would not make a big difference in the short-term.

“There would be no immediate benefit due to the global financial market conditions. However, this offers an additional avenue for SEZ developers to get funding requirement at a lower cost”, a senior Unitech offical said. Currently, Unitech has five IT-SEZs in the country. The Government on Tuesday modified its external commercial borrowing (ECB) policy to allow SEZ developers to avail ECBs for providing infrastructure facilities within the SEZ. The SEZ developers can avail themselves of ECBs only under the approval route, according to a Finance Ministry release. However, ECBs will not be permissible for development of integrated township and commercial real estate within the Special Economic Zones (SEZs). Read More »

DLF’s DE Shaw Stake Buy Plan in Trouble

Plans by the promoters of top real estate company DLF to buy out hedge fund DE Shaw’s investment in family-owned DLF Assets (DAL) could hit a roadblock because of a little known rule in the country’s foreign exchange laws, people familiar with the matter said. Under a ‘put’ option signed between DE Shaw and three companies controlled by DLF-promoter KP Singh’s family in May 2007, the US-based fund, which invested $400 million in convertible preference shares of DAL, could exit its investment and get a fixed return of at least 27%. As per the ‘put’ option with DLF Investments, Kohinoor Real Estates and Buland Consultants, DE Shaw is supposed to get back around Rs 2,500 crore after forex adjustments, a person with knowledge of the matter said.

But the rule in the country’s Foreign Exchange Management Act (FEMA) classifies all equity investments that carry a fixed return as debt, which could bring DE Shaw investment under the purview of external commercial borrowing (ECB) guidelines. With ECBs not allowed in the real estate sector, investors holding convertible stock with fixed returns could find their exit option blocked. “It will be very difficult for any investor in real estate to exercise the put option with a fixed exit price for the equity because of FEMA guideline,” a top corporate lawyer told ET NOW on conditions of anonymity. 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 »

Property Prices in Navi Mumbai on Rise

Notwithstanding the concerns over the proposed international airport in Navi Mumbai, real estate prices around the satellite city have rising for the past one month. During the past 30 days, prices of medium residential apartments rose by Rs 300-500 per square feet across various nodes in the city. The present prices range at Rs 2,500-3,000 per square foot across nodes like Kamothe, Panvel, Kharghar, Khandeshwar and CDB Belapur, said Srikanth Puduval, a real estate agent. The prices at nodes far from the proposed airport site — like Airoli, Koparkhairane and Nerul — managed to hold steady at around Rs 3,000 per square foot(medium residential apartments), despite the financial crisis. This also varies, as prices are different for different builders, while high-end and premium complexes are priced higher.

“The soaring of prices is based on speculation that the airport would eventually get clearance. The price rise is across residential and not in retail or commercial structures, but as the area develops (with proposed Special Economic Zone and airport), the hike will spill over to commercial establishments also,” Cushman & Wakefield Executive Director (Occupier Solutions) Arvind Nandan told Business Standard. Real estate prices are determined by certain benchmarks, and prices of Rs 2,500-3,000 for suburbs seem to be on the right side.

Downturn Hit Realty Majors Betting Big from Forthcoming Budget

Having been hit the hardest by the economic downturn, embattled realty majors are betting big on the forthcoming Budget, to be presented on July 6, in a bid to revive the sector’s fortunes. Experts say the sector needs government support as well as further stimulus to get out of the current slump. While the government with a clear mandate has provided the requisite stability to the economy, it now needs to focus on retrieving the sluggish real estate which is now facing a severe financial crunch. This is important in view of the fact that real estate in India is the second largest employer next only to agriculture, and growth in the sector has a direct impact on ancillary industries such as steel and cement. “In the backdrop of its importance to the growth of the Indian economy, it is vital for the government to nudge growth in the sector, through fiscal stimulus, to newer heights which would also help make affordable housing a reality and within the reach of the proverbial ‘aam aadmi’,” says Nandita Tripathi, associate director, KPMG.

As a first step, the government should accord ‘infrastructure status’ to the housing sector and appoint a regulator to act as a single window for overseeing and monitoring the affordable housing agenda. “After being hit by the global financial meltdown, real estate developers have now recognized the growing demand for affordable housing. To provide further impetus to this direction of development, the government should consider reinstatement of the tax holiday benefits under Section 80IB-(10) for affordable housing projects,” says Tripathi. Brotin Banerjee, MD & CEO, Tata Housing, is also of the same view. “We seriously believe that the housing sector should be delinked from real estate and be accorded infrastructure status. This will enable easier access to low-cost institutional funds as also allow the sector to tap long-term funds,” he says. Read More »

Real Estate Still a Good Investment Option

The real estate sector plays a significant role in India’s economy. Almost 5% of the country’s gross domestic product (GDP) is contributed by housing alone and an unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times the increase in expenditure. According to Dun and Bradstreet Corp., a provider of credit information on businesses and corporations, the total value of real estate development in India was estimated to be around $14 billion (Rs67,480 crore), growing at an annual pace of 30%. This growth is fuelled by the growth in realty development in organized retail, followed by housing and information technology and information technology-enabled services.

While such statistics are praiseworthy, it is also relevant to remember that the ongoing slowdown had started with a bursting of a bubble in US real estate, driven by reckless demand and supply conditions. Real estate in India has been characterized by an increasing presence of a large number of public companies, along with the opening up of this sector to foreign direct investment (FDI) and private equity firms. This has increased the discipline and accountability of businesses undertaking large-scale real estate developments. On demand, Indians have an innate propensity to own homes. This, with rising income levels following India’s rapid growth, has resulted in a phenomenal increase in the demand for homes. Read More »

Mumbai Developers Look to Increase Property Prices

Real estate developers have begun to increase property prices in some pockets of Mumbai like Ghatkopar, Thane and Andheri, after emerging unscathed from a severe liquidity crunch. “I think the correction (in real estate price) has almost bottomed out. In fact in some places I find that real estate developers have started increasing the rates as their cash flows improve,” said R R Nair, chief executive of LIC Housing Finance, a subsidiary of Life Insurance Corporation (LIC).

The government had ensured easy flow of credit to the real estate developers. Banks increased their exposure and also extended repayment period of loans to developers during 2008-09 to help them tide over liquidity crunch. “The demand for real estate has started picking up as people who had deferred their buying decision are now coming forward to buy homes,” said Nair.

Housing Rebound Raises Hope for Asian Property Firms

Asian property firms are beginning to see light at the end of the tunnel and several are positioning for an upturn even as the world economy struggles to recover from its worst recession in decades. The mood among US and European executives at the recent Reuters Global Real Estate Summit was glum, but Asian counterparts were more upbeat with some revealing plans for new projects in anticipation of an upturn later this year. For instance, Chinese commercial property developer SOHO said it has built up a war chest of $1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months. Indiabulls, India’s third-largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

‘’The general mood has been cautious, but there is also optimism. Asian companies in general are in much better shape compared to their peers in other regions,'’ said Ayala Land Chief Financial Officer and Asian Public Real Estate Association President Jaime Ysmael. Spurring the optimism in Asia is a recovery in residential markets, with price cuts drawing buyers in China, Hong Kong and Singapore, where saving rates are high and banks are prepared to lend. The volume of transactions in these places are close to levels seen during the bull market of 2007 and residential property values have begun to edge upwards as developers such as Singapore’s City Developments raise prices. Asian property values did not rise as much as in the US and parts of Europe this decade. In dollar terms, properties in countries such as the Philippines are cheaper than before the onset of the Asian crisis in late 1997. Read More »