Latest Property News on 'Real Estate India'

Chennai Overshadows Mumbai as an IT and BPO Hub

Chennai has displaced Mumbai as the most preferred destination for ITeS and BPO companies wanting to set up delivery centres in India, according to a study done by Dun & Bradstreet. At fiscal-end 2008, 14.1 per cent of the delivery centres in India were located in Chennai, closely followed by Bangalore with 14 per cent and Mumbai with 13.3 per cent.

Dun & Bradstreet’s study for the previous year saw Mumbai as the most preferred BPO location while Chennai was second in that list. “The growth rate in Mumbai in terms of number of delivery centres has plateaued whereas Chennai has registered a steady year-on-year growth of around 14 per cent ,” Mr Kaushal Sampat, Chief Operating Officer, Dun & Bradstreet – India, told Business Line in an e-mailed statement. The comparative affordability of Chennai (vis-a-vis Mumbai), availability of talent, and a robust academic ecosystem appear to be driving this trend. Chennai is a much more cost-efficient city than Mumbai; moreover, it produces an equally good talent pool as Mumbai, according to Mr Amar Chintopanth, Chief Financial Officer & Executive Director, 3i Infotech. Read More »

India’s Dying Building Boom

India’s building boom is petering out. Many large realtors are in dire financial straits, their shares have been battered and real estate prices are dropping. As with all economic transitions, this one too has both good and bad aspects. The good comes from the fact that the vertiginous rise in real estate prices over these past five years had put home ownership outside the budgets of most Indian households. Even a small flat in a city such as Mumbai was priced at close to Rs50 lakh. Few urban families can put that sort of money on the table at one go or comfortably service the hefty mortgage needed to buy such a house. Add to that the fact that realtors moved aggressively up market to sell spacious homes to the relatively rich. In short, large sections of urban India were priced out of the market and forced either into rented homes or into slums. Restrictive land use laws and poor urban infrastructure have already conspired to deny affordable housing to urban families. The real estate bubble made things worse. There could be some respite now that prices are likely to come down to more reasonable levels.

That is the good news. But there is a dark underside to the woes of the real estate sector. Construction activity now accounts for one-tenth of India’s non-agricultural gross domestic product (GDP). It has been one of the fastest-growing parts of the economy. It also offers millions of jobs to unskilled workers who flee rural misery. Six out of every hundred working Indians are employed in construction activities. The Planning Commission estimates that at least one-fifth of the 115 million new jobs likely to be created between 2006 and 2016 will be in construction. That is more than new jobs expected from manufacturing. Read More »

Finance Minister Assures growth of Indian Economy

Finance Minister P. Chidambaram on Monday asserted that despite the global meltdown, India, unlike many other global economies, would continue to grow at seven to eight per cent this fiscal. It was nowhere near a recession.Inaugurating the Economic Editors’ Conference here, Mr. Chidambaram pointed out that such a level of growth, even as the global financial crisis had become worse, would be the second fastest growth rate globally. “I wish to emphasise that India is nowhere near a recession. The growth estimated for the first quarter of 2008-09 is 7.9 per cent and the second quarter will, undoubtedly, show high positive growth. Therefore, we must banish the thought of recession,” he said, urging the media not to use the word ‘recession’ while describing the Indian economy.

Mr. Chidambaram admitted that the global scenario was still grim, but there was a silver lining for India as the situation would provide it an opportunity to review and revisit pending reforms. “As and when required, we must introduce measures, particularly in the financial sector, to make our economy more competitive and the economic regulatory and oversight system more efficient, quick and responsive to global developments,” he said. Besides, with the inflation rate dropping to single digit, interest rates could come down further. This would spur demand and induce growth. “If the rate of inflation continues to decline, policy rates may also moderate and the bias in favour of growth may deepen … the RBI’s policy is now biased towards stimulating growth,” Mr. Chidambaram said. Read More »

Mumbai Emerging as Manhattan of the East

Mumbai has much to offer its expatriate residents. For the thousands of people who leave the UK each year and head for a new life in India, the world’s largest democracy is certainly no third world option. The growing numbers of British expatriates living in Mumbai (Bombay) - locally known as the Manhattan of the East - say that life here is not a cheap alternative. According to the latest UK Government statistics, migration to South Asia is up by over 100% in the past five years and that trend looks set to continue. It is not difficult to see why the statistics are moving upwards. Mumbai is a cosmopolitan city where you can get anything you want anytime you want it.

The only problem is that you have to pay for it and you will find you are not the only ones wanting the best table in that restaurant or that prime piece of real estate. In reality you are probably at the back of a long queue where everyone’s got money and they came here before you.

Real Estate Sector on the edge of correction

Property market in India is poised for a deep correction and the prices are estimated to fall by up to 30% from current levels, with significant knock on effects on the economy, says a Goldman Sachs report.

Supply substantially outstrips demand in commercial real estate, hints the report depicting a negative view on the real estate sector, and its supplier industries such as cement, iron, and steel, and reiterated their below consensus estimate of 5.8% GDP growth in FY10. Read More »

Collapsing Real Estate Fortunes

Investors pounced on shares of Chinese property developer Soho last year after founders Zhang Xin and Pan Shiyi publicly listed the company. The value of the husband-and-wife team’s stake soared to $3.8 billion. Zhang said it was “probably a perfect moment.”

A year of credit crisis later, it’s more of a perfect storm. Company shares plummeted and Forbes now values Pan and Zhang’s fortune at $1.2 billion. The sharp fall could have been even worse if not for Soho’s healthy balance sheet, which had a billion dollars in cash at mid-year. Read More »

Realty Market Recovery Hinges on Lower Rates

Recovery in the Indian property market in the next six months hinges on lower home-loan rates to entice first- time buyers.

“Mortgage rates in India are at 12 percent to 13 percent, about twice what they are in China. That is unrealistic,'’ Rajiv Singh, 49, vice chairman of DLF, said in an interview. “If rates are cut, the domestic demand itself will carry the country through this difficult period.'’

DLF lost four-fifths of its market value this year as the highest interest rates in seven years sapped demand for apartments and homes. Finance Minister Palaniappan Chidambaram said this week there is scope for lower borrowing costs after two reductions in a month failed to unblock credit markets. Read More »

INC Developers enters India with Rs 100 cr investment

US based INC Developers has entered the heavily slowed Indian real estate market with a super luxurious apartments scheme worth Rs 100 crore, which it would jointly develop in Pune with Amar builders over next 24 months. The super luxurious apartments with 6,500 square foot size each, would be priced between Rs 5 crore and Rs 6 crore.

INC Developers, incorporated three years back in California, have completed more than 30 residential projects worth more than $ 400 million. The newly announced project titled ‘Manhattan’ is its first entry in the Indian real estate sector. Speaking to reporters, INC Developers executive director Jay Kinra said, “Although the Indian real estate market has slowed down, it will have a temporary effect. And we are building super luxurious apartments, which would be sold very easily.” Read More »

CREDAI asks Members to Lower Prices

Real estate developers in India should lower prices given the general slowdown in the economy, the Confederation of Real Estate Developers’ Associations of India (CREDAI) has said.

“Some developers across the country have already reduced prices, CREDAI now requests all its members to do the same,” the real estate body, which counts over 3,500 developers as members, said in a release on Wednesday. Read More »

Real Estate Prices should Drop More

Property prices in India need to decline further before demand picks up, said Adi Godrej, who heads the Godrej group of companies that has interests in property, consumer goods, and electrical and office equipment.

There has already been a correction in property prices, he told reporters at the World Economic Forum’s India Economic Summit in New Delhi today, without elaborating. The group has real estate projects in Mumbai, Kolkata, Bangalore and Pune, according to its Web site. Read More »