Latest Property News on 'Real Estate Trends'

Decline in Demand of Service Apartments

The demand for service apartments has declined in the last few months due to the slowdown. This apart, real estate experts feel that lack of dedicated players and lower hotel room prices too have impacted the demand in this segment. This, however, was not the scene a year ago. “Last year, the boom had resulted in corporates offering a lot of privileges like frequent travels, which had seen a rise in demand for service apartments. However, lately, with the domestic travel reducing and even hotels offering cheaper prices, the demand has dropped a bit. Nevertheless, the industry expects demand for service apartments to rise again in the next six months,” says Jaxay Shah, director, Savvy Infrastructure Limited.

Real estate analysts agree that the option of service apartment is better than hotels as far as corporates are concerned. “Service apartments carry facilities that support stay with a duration of 15 days as well as over six months. Compared with that, staying in hotels tend to be costlier. Longer stay, however, is being ruled out by corporates as of now. Rather, they are now relying on video conferencing and other cost effective means,” says Ashutosh Limayi, associate director, strategic consulting at John Lang LaSalle Meghraj (JLLM), a real estate consulting firm. 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 »

Indian Residential Market can Turn Positive in 2010- Crisil

Demand in the Indian residential market is expected to turn positive in 2010 due to improvement in affordability, steady economic growth and greater liquidity, says a Crisil research report on the real estate sector. However, the decline in the currently overpriced capital values of all three real estate segments of residential, commercial and retail will persist through 2009. Commercial and retail markets will continue to see erosion of lease rentals in the next two years, it says.

The report is an analysis of over 400 areas across 88 micro-markets in Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai-MMR, National Capital Region and Pune. Mr Sudhir Nair, Head, Crisil Research, said: “Accelerated growth of Indian economy, recovery of global economy, improved liquidity and expected fall in interest rates are key factors that will signal demand revival in the residential segment. This segment is likely to see a much faster revival due to a strong underlying demand for housing and supply coming at attractive price points.” Read More »

RE/MAX Plans Entry into Gujarat

India, a part of the world’s largest Real Estate franchising network has announced its plans of entering into the state of Gujarat. As the first step, RE/MAX India is organizing a formal meet in the city on June 26th & June 27th, 09 to introduce it’s concept and working pattern. After the recent foray in Chennai, Ahmedabad venture will be another feather in the company’s hat of well listed expansion plans for establishing strong footprints in the Indian real estate market. RE/MAX India is on its way towards organizing and bringing professionalism in this unorganized but compelling market.

Ahmedabad, among the top five famous cities of the country is prospering due to the huge growth in the industrial sector. Seventh largest and one of the most populated cities of the country, it has continuously witnessed a demand for real estate. Since the dawn of the development phase in India, Real Estate in Ahmedabad has been receiving maximum exposure and has witnessed high developments. The real estate sector is also flourishing because of the major developments by builders in Ahmedabad. Majority of the big builders are constructing properties which are not only for residential but also for commercial purposes. It means every kind of property need is being catered for. With 10 new real estate projects in the pipeline, it has witnessed growth despite the slow down. Read More »

Stimulus Expected for Real Estate Sector in Budget 09- Experts

Although, Indian economy as a whole has largely been insulated against the global economic slowdown, the Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector. Demand dynamics of one large industry decide the fortune of its ancillary industries. The ups and downs of the real estate market have serious implications on companies whose future is linked to the housing and infrastructure demand in India.

The risk straddle includes industries such as furniture, granites, ceramic tiles, paints, power cables, glass, electrical equipments and interior designers among others, which exemplifies the significant backward and forward linkages that the real estate sector has with the economy. There is a need for the Government to provide a stimulus for the industry so as to revive this ailing spectrum of sectors. And what better time can there be, than the forthcoming budget! Read More »

Stable GOVT and REITs can Bring Back NRI Investors

With the market sentiment buoyant over the prospects of a stable and investment-friendly government at the Centre and a distinct exchange rate advantage, overseas Indians may once again turn their attention to the rapidly-recovering real estate market in India. More so, as market regulator Sebi (Securities and Exchange Board of India) has begun deliberations with experts to set up a framework for Real Estate Investment Trusts (REITs). In April last year, Sebi had prepared norms for real estate mutual fund. But the launch of real estate MF was delayed due to the market meltdown. The realty sector, battered by the financial crisis, is looking at the real estate investment trust (REIT) market to lift the spectre of gloom.

Over the past 3-4 months, the global REIT market has witnessed a sharp pullback, recording an equity infusion of $8.7 bn. Equity infusion by investors at this point in cycle suggests that they see value and opportunity at current price levels. According to a recent research by brokerage Motilal Oswal, the improvement in the global REIT market will positively impact commercial real estate in India, which lacks any monetisation vehicle at present. If the recovery in REIT demand continues, it might prompt leading commercial real estate players such as DLF, Unitech and IBREL to re-draw their REIT plans. A real estate investment trust or REIT is a vehicle for a company that invests in real estate, which helps in reducing or eliminating corporate income-tax. An REIT is a trust that uses the pooled capital of many investors to purchase and manage real estate assets and/or mortgage loans. Read More »

Big Malls Make a Comeback

The global financial meltdown and its concomitant effect on India’s real estate industry had forced developers to defer supply of mall space in 2008. However, in what could be seen as early signs of revival of retail real estate, as many as 100 malls, spread over 30 million sq ft, are expected to come up in 2009 and 2010, according to a report. Though this figure is much lower than what was projected a couple of years ago, analysts say this is finally a positive development, realtors are now more keen on matching supply with demand, placing themselves in strategic locations and offering greater differentiation. An additional 31,846,504-sq ft of mall space will be created across India, according to a report, Mall Realities India 2010, released by retail research group Images in association with the Shopping Centres Association of India, Jones Lang LaSalle Meghraj and Cushman & Wakefield (C&W) India.

The north zone would see the development of 14,790,000 sq ft, of which, Delhi NCR alone is expected to account for 7,645,000 sq ft of mall space. This translates into 45 malls expected in the north zone with 24 in Delhi NCR itself. “The NCR region is huge in terms of area, and residential areas give way to markets. Malls nowadays are not just about shopping. They are leisure centres, with cinema halls, restaurants, beauty parlours and other entertainment avenues. Only malls with a multi-faceted role to suit every pocket will survive,” says Rajeev Talwar, group executive director of New Delhi-based real estate firm DLF. West zone is expected to supply 7,438,504 sq ft through 47 malls. South and east zones would account for 29 malls over 5,865,000 sq ft and 13 malls over 3,753,000 sq ft, respectively. Read More »

RE/MAX India Enters Chennai market

RE/MAX, the world’s largest real estate franchising network entered India on the shoulders of Mr. Samir Chopra on 19th January 2009. RE/MAX India has signed its first regional franchisee at Chennai. Ace realty owner, Mr. V.S. Raman has become the regional owner for Chennai. With this initiative, RE/MAX having more than 7,000 open offices in 74 countries has taken it’s first step towards building a nationwide network of real estate community. Speaking on the occasion, Mr. Samir (Sam) Chopra - Chairman & Managing Director RE/MAX India said that “RE/MAX India is happy to welcome Mr. V.S. Raman as its first regional franchisee. We view this as a great opportunity to associate RE/MAX with V S Raman whose expertise in Realty would help in leveraging the brand in this part of the country.”

Adding to this Sam said, “We are confident that RE/MAX India will gain new heights under the leadership of Mr. Raman, who is a person with high integrity levels, the kind of person which the world’s leading brokerage network would want in its elite team of region owners”. This is a first of its kind initiative taken by RE/MAX India which is working towards organizing and bringing professionalism in the unorganized real estate market of India. Mr. V. S. Raman said that “We are proud to bring RE/MAX to Chennai. We look forward to being a vibrant part of the RE/MAX community and playing an important role in the real estate transactions in Tamil Nadu” Also, RE/MAX India is planning to open Franchisees in major towns and regions of the country. Bringing into its network, the leading brokers of the specific regions and trying to create an unprecedented network and referral system.

Sensing Recovery MF Managers Repose Faith in Realty Sector

Sensing a near term economic recovery, fund managers reposed their faith in the realty sector. In the month of April, mutual fund houses increased their exposure in realty sector to Rs 308.16 crore as against Rs 98.76 crore in March – translating into a 212.03 per cent rise in the sectoral exposure. In April alone, fund managers increased buying to the tune of 2,56,98,376 in Unitech, 1,29,77,814 in Punj Lloyd and 79,47,587 in IRB Infrastucture making these three scrips the hot picks in the realty space. Buying enthusiasm was evident during the month of April when BSE Realty index rose by 29.48 per cent, highest among other BSE sectoral indices during the month. There are basically two reasons attributable against such huge buying by the mutual fund managers.

The liquidity crunch emanating from the global recession forced the banks and financial institutions not to lend money to the real estate companies (prior to stimuli packages). Consequently, big ticket realty projects were halted. It has finally brought down the share prices of realty companies. Real estate share prices have corrected by 80-95 per cent during the downturn. Said Hiren Dhakan, mutual fund analyst, Bonanza Portfolio, “there were nothing fundamentally wrong with those real estate companies. Due to temporary liquidity crunch big real estate companies were facing challenges and available with low PE multiples. This attracted fund managers to go into buying spree.” Read More »

Tata Real Estate and Infrastructure Limited Plans 20,000 Crore Investment

TRIL has hired Sanjay G. Ubale, a former IAS officer to head its real estate and infrastructure foray. Tata Realty & Infrastructure Limited (TRIL), a wholly-owned subsidiary of Tata Sons, has unleashed it mega investment plans for the sector. The company, part of a $62.5 billion Tata group, has said that it plans to develop real estate and infrastructure projects of around Rs 20,000 crore in next three years. It has raised a $700 million offshore fund to invest in its real estate project for the same. TRIL has hired a former IAS officer to head its real estate and infrastructure foray. Sanjay G. Ubale, MD & CEO of TRIL, was till recently Secretary, Special Projects with Government of Maharashtra, where he was responsible for redevelopment and transformation of Mumbai. The projects are being developed with various strategic partners. The $700 million fund is based out of Mauritius, and 18-20% of the capital has already been deployed.

The company has also announced several real estate projects it’s developing, which include IT/ITES SEZs at Chennai, Ahmedabad and in Hinjewadi. TRIL is also developing a 7 lakh sq. ft. retail complex in Amritsar, adjacent to which Taj hotels would also open a property. It is also evaluating a residential and mixed use development on a 35 acre plot at Gurgaon. For its infrastructure push, TRIL has partnered with a number of overseas companies. Its focus areas in infrastructure are roads and bridges, urban infrastructure (comprising metro/monorail projects), airports and logistic parks. Some of the projects it is considering are Metro projects (in partnership with Mitsubishi Corporation), New Delhi Railway Station redevelopment (with Grandi Stazioni), Amritsar & Udaipur Airports (with Changi Airports India), and roads & highways (with Atlantia S.p.A). Read More »