NRI's Looking for property in India?

Real Estate demand fuelled by returning NRI’s

noreply@blogger.com (NRI Real Estate) — Wed, 09 Dec 2009 06:47:00 +0000

According to World Bank report on Migration and Development Brief India topped the list of countries for remittance flow from non residents of country. Surely a major portion of remittance is towards real estate sector. The impact of global meltdown, job losses etc are creating a need for NRI’s to return to their home country. This is not just happening at retail level (individuals looking for real estate for personal or investment purpose) but also on an investor’s level (high net worth individuals looking for investment in real estate projects)

The latest is Dubai market where real estate crashing has again led to Indian investors coming back to Indian shores looking for investment opportunities in real estate sector in India
According to housing finance companies and banks disbursing home loans to NRIs/PIOs in Dubai, there has been a sudden surge in demand for residential property across Indian cities and particularly for tier II cities in the wake of the economic slowdown in the emirate. The home loan market in Dubai alone has been estimated at Rs 250 crore, Rs 300 crore per month with housing finance companies and banks having representative office to disburse home loans. The demand for built units is said to be more as returning NRIs are keen to move into their own units.

However demand is not only from an investor’s perspective. Even the returning NRIs are keen for build houses/apartments as they have definite plans to return to India in near/vey near future. This trend will see huge demand for villas, houses, apartments ranging from INR 40 Lacs to 80 Lacs. The situation is getting an impetus from lower rate of interest from Indian banks for home loans; this is lucrative especially when NRI’s are unable to get loans locally due to the current tight liquidity situation across US

Real Estate Collapse in Dubai - Impact on Indian High Networth Individuals

noreply@blogger.com (NRI Real Estate) — Tue, 01 Dec 2009 13:40:00 +0000

The leveraged asset purchases of Dubai-based wealthy non-resident Indians in the past few years may begin to haunt them, as the collapse of real estate prices in the emirate prompts calls for additional funds as margins which may force them to sell some Indian assets, experts say. “Indian HNIs (high net worth individuals) made good use of easy credit lines in the past two years,” says Dubai-based JRG International Brokerage CEO PK Sajitkumar. “They even made investments using leveraged money, investing into India-focussed funds, buying freehold property and buying into Indian shares through participatory notes,” he said. “The situation is now so bad that many of these people will have to sell their leveraged assets, may be at a loss, to meet margin calls or retire debt.”

Slide of real estate and other asset prices in the Middle East has begun to accelerate after Dubai World, the government-backed conglomerate, last week sought moratorium on debts of about $59 billion. This has led to lenders seeking additional collateral for assets funded so far. Those unable to deposit more funds with the banks may be forced to sell assets, including Indian stocks, or even think of selling Indian real estate. The fall in Dubai property prices has gained momentum over the past two weeks with rates going back to pre-2006 rates.
According to Saud Masud, a real estate analyst with UBS Dubai, the city-state’s property market could fall by up to 30%, from current levels — it’s already down 50% from the past year’s levels — and may take more than a decade to recover. “HNIs who bought into Gulf real estate in the one year since May 2007 are in trouble,” says Krishnan Ramachandran, CEO of Dubai-based Barjeel Geojit Securities. “They will have to clear their debts by selling off a sizeable portion of their investment portfolio.”

Dubai-based money managers say banks in the emirate loaned such clients 8-10 times their capital while buying freehold property in 2007 and 2008 when the real estate was booming with the desert being sold as the next big international financial centre behind New York and London. For investing into India-focussed funds — funds that invest into Indian assets such as real estate, equities or debt — wealthy investors were given loans 3-5 times their capital, according to them. Mauritius and British Virgin Island-registered asset management companies have launched more than 500 India-focussed funds since 2007, global money managers say. Leveraged investments account for over 60% of the total asset under management of all such funds, they say.

Those wealthy individuals who have exposure to Indian equities through participatory notes issued by banks such as Citigroup, Barclays and UBS may be forced to exit their positions to make good the losses incurred in Dubai. These investors will not be able to liquidate all their Indian debt portfolio as rules stipulate such assets are held at least for a year to 3 years. “Leveraged investors may now have to sell risky/high-return assets to cover their losses in Dubai. Such selling could impact Indian markets as well,” said Saurabh Mukherjea, head of Indian equities at Noble Group

Source - http://www.indianrealtynews.com

RBI bringing in some sanity to real estate sector

noreply@blogger.com (NRI Real Estate) — Fri, 25 Sep 2009 13:28:00 +0000

Real estate companies having substantial investment in their subsidiaries, RBI today asked banks to assess the risk of the group as a whole while giving loans to these companies.
As per RBI notification some of the companies operating in real estate sector have huge and significant exposure in the form of advances, investments o their subsidiaries and other group or related entities. That is why as a matter of prudent advise to Banks, RBI has notified them to assess the inherent group risk of their borrowal accounts falling under the purview of real estate sector
RBI also stated that while assessing the loan requirements of large land developers, they may analyze the financial credentials and viability of the borrowers supported by the position of the group
If the banks heed to the advice by the central bank, there can be a sense of sanity brought into real estate sector and assess risks associated with other interests of real estate companies

9% rise in realty stocks !

noreply@blogger.com (NRI Real Estate) — Thu, 16 Apr 2009 11:57:00 +0000

They may be bogged down by debt and demand slowdown. But real estate stocks have suddenly caught the fancy of investors with top companies in the sector emerging as major gainers when sensex breached the 11000-mark on Wednesday. The BSE Realty Index was the topper among sectoral indices closing the day 8.79% higher. Sensex ended 2.9% higher with the BSE-100 advancing 3.3%. Ansal Infrastructure emerged as the biggest gainer among the pack with the stock jumping 17.1% during the day. Unitech, which is rescheduling its debt, rose 15% and DLF, the country’s largest real estate firm, saw its scrip rise by 10%. The Realty Index has performed impressively in the current rally. Realty gained the maximum registering 13.7% increase for the week ended April 9 compared with the 4.4% advance made by sensex. DLF moved up 9.2% while Indiabulls Real Estate and Unitech ended the week 25.4% and 12.1% higher respectively during the period.

High debt levels, however, are weighing down on the performance of realty companies. While DLF is estimated to have Rs 15,525 crore in debt, Unitech has Rs 8,900 crore with interest costs for the next financial estimated at around Rs 2,000 crore and Rs 1,150 crore respectively for the two realty majors. Analysts point out that the stocks have been rising on the hopes of a further rate cut. With debt restructuring now complete, investors’ focus would now shift to the ability of companies to service interest costs, according to Amit Adesara of Emkay Global Financial Services. “Attractively priced projects have found tremendous response. Cash flows generated from these projects will be utilised for interest servicing.”

However, some analysts don’t seem impressed. “There is no improvement on the macro economic front for the realty companies to have rallied. We expect the sector to reel under pressure until interest rates go back to lows of 7-8% and prices correct to affordable levels,” according to analysts at Angel Broking. The brokerage firm, in its weekly note, has maintained that it remains ‘neutral’ on realty and advised clients to stay away from stocks in the sector.

SBI will not extend loans to any new realty project !

noreply@blogger.com (NRI Real Estate) — Thu, 16 Apr 2009 11:55:00 +0000

India’s largest lender State Bank of India (SBI) has said it will not extend loans to any new realty project even though it counts many property developers among its clients. It is a no to new real estate projects however bank will have existing customers and if they need additional help or restructuring, bank will extend its help. The fact also is that not many proposals are coming these days. SBI expects earnings to grow at 25% in the fiscal year to March 2010 and plans to maintain its net interest margins in the range of 3%.
The public-sector bank could also lower deposit and lending rates by 25 basis points in the next six months. One basis point is a hundredth of a percentage point. The bank is also looking to cut its prime lending rate (PLR), though this might not apply to retail customers. PLR is the rate at which banks lend to their top-rated clients. The top executive also said the process of selling stake in UTI Mutual Fund was in its final lap. There are talks with an international player for the stake sale and is likely to be at the earliest.
SBI said it requires Rs60, 000-70,000 crore in the next five years to fund growth and plans to raise Rs20,000 crore by the end of the year. It is targeting an aggressive 25% loan growth in the current fiscal year because its non-performing assets have declined in 2008-09 compared with the preceding financial year

Banks to slash home loan interests - SBI, HDFC....

noreply@blogger.com (NRI Real Estate) — Mon, 13 Apr 2009 11:26:00 +0000

According to the latest report, the home loan interest rates will be further reduced so that the Indian people can avail loans at cheaper rates. The financial experts believe that it will boost up the image of the financial sector and evoke a deep interest for loans among the borrowers. It is also a good news for the borrowers that many public and private banks are offering finances at very low interest rates.

According to the financial experts, the home loans are generally sought by people for getting their dream home. They satisfy almost all the needs regarding a home. If you keep a close watch on the current financial market, you must be knowing that the interest rates for such financial tools have been dropping to a great extent. Such steps are taken to provide relief to the loan seekers. According to the bank reports, the main reason for the plummeting interest rates is the global downfall of economy. This is why the Public Union Banks have decided to slash the interest rates of finances before three months. After this decision of Public Union Banks, the borrowers have shown a great interest in availing loans and the craze for finances have returned back.

It is said that, the reduction of the interest rates for home loans is a new year bonanza for people. With bank authorities promising more cuts in the interest rates, the demand for credits will definitely rise and help the financial sector to recover.

According to a report, HDFC bank has also promised to cut its rates on loan against property and securities by 150 to 200 points. HDFC bank has launched special home loan product, offering an interest rate of 9.75 for an amount of 30 lakhs.

At last ! Timely completion may be a realistic promise :)

noreply@blogger.com (NRI Real Estate) — Tue, 17 Mar 2009 17:54:00 +0000

In todays economic down turn, selling residential project is a challenge in itself ! There was value adds which were being used as attraction so far and now the new tactic is gaining popularity which is timely completion of the project
In this downturn, the promise of ‘timely completion of project’ has become as good a bait, as any other — affordability, complementary club membership or swimming pools. With the slowdown in sales and cash crunch delaying real estate projects, some builders have started pitching ‘on time completion’ as their Unique Selling Proposition — a commitment that until recently was taken for granted. The biggest fear of a real estate buyer today is protection of his capital invested into a project, and its completion

A case in point is the recent marketing campaign unleashed by Crossings Republik which declares that despite the “tough times” and “slump in global economy”, its project has been running on schedule. Another ad campaign, by Purvanchal Construction Works, talks of a commitment to “completion and possession on time”. Industry experts feel that when the market was ‘euphoric’, completing projects on time was a given. Now with funds drying up and projects getting stalled, real estate buyers are already feeling the heat — for some possession has been delayed by over one year. Builders are now hoping to differentiate themselves from the rest, by meeting project deadlines.

For me, a buyer myself who has faced the pushing deadlines, poor quality of work, this indeed is blessing, ofcourse on an assumption that the deal is too good to resist :)

A new beginning for India - Housing Start-up Index

noreply@blogger.com (NRI Real Estate) — Thu, 12 Mar 2009 18:23:00 +0000

A technical advisory group (TAG) set up by the Reserve Bank of India (RBI) has recommended the creation of a Housing Start-up Index (HSUI) to be based on newly-built residential units in urban India and compiled on a quarterly basis. The central bank is likely to launch the index, work out the computation methodology and monitor its evolution.

The number of housing starts during a period indicates the demand and supply situation as reflected in conversion of building permits into actual starts. Housing starts are considered lead indicators of economic activity due to their strong forward and backward linkages with other sectors.

The TAG said the HSUI would be confined to newly built residential units in urban India, whose construction is authorised through the issuance of building permits. The start-up co-efficients should reflect the recent experience of converting the housing permits into housing starts and the number of permits issued during the past two years. The group made its recommendations after studying the practices followed in Canada and USA.

Post liberalisation, RBI has been largely looking at equity prices to keep a check on asset price inflation. The significance of real estate in the economy has increased substantially in the recent years, compelling the central bank to also look at real estate prices. The RBI had, in fact, made it more expensive for banks to lend to real estate as a counter-cyclical measure.

The Case-Shiller Home Price Indices are a useful tool for measuring the movement of nominal house prices in the United States. The index indicates the price direction by using sales data for the same house over time.

The HSUI will be initially based on co-efficient matrices constructed for the six metros

Govt initiatives for attracting overseas investments !

noreply@blogger.com (NRI Real Estate) — Thu, 12 Mar 2009 18:18:00 +0000

Companies in sectors with foreign direct investment (FDI) limits could soon be exempted from taking prior approvals for participation by foreign funds in their share issues, as per new rules being considered by the government to attract more overseas investments. A committee of top government officials will soon consider a proposal that seeks to explicitly do away with the Foreign Investment Promotion Board’s (FIPB) approval for investments by foreign institutional investors (FIIs) in public offers of companies that operate in sectors with such FDI limits

The proposal, mooted by the Department of Industrial Policy and Promotion (DIPP), is likely to be taken up by the committee of secretaries shortly, said the commerce and industry ministry official, who asked not to be named. This move will remove all ambiguity in the policy over whether FIPB permission is needed for such investments and could benefit companies in sectors such as singlebrand retail, aviation and telecom, all of which have strict foreign investment limits. At present, the government’s foreign investment policies are silent on whether such investments need FIPB approval, but companies as a practice take its approval for their public offers due to lack of clarity.

Recently, Oil India and National Hydel Power Corporation sought FIPB approval for raising foreign capital in their planned initial public offerings, though both the oil and power sectors come under the automatic route where such approvals are not needed. “There is a lack of uniformity and clarity in the existing policy as far as treatment of FII investments vis-à-vis constituents of a sectoral cap is concerned,” the official said. The secretaries’ panel will also consider a separate proposal to just prescribe a single composite cap on foreign investment, doing away with sub-limits on portfolio investments by foreign funds and FDI. Sectors such as commodity exchanges, credit information companies, stock exchanges and direct-to-home broadcasters have sub-caps for FDI and portfolio holdings by foreign funds.

If approved, foreign investment in a company could be through any route so long as it remained within the stipulated composite ceiling. The committee of secretaries will also consider proposals for easing various restrictions for foreign investment in the real estate and aviation sectors. The proposal for aviation includes allowing up to 49% FDI in aviation through the automatic route. For real estate, the restrictions mainly pertain to minimum area and capitalisation requirements. The proposal will seek to reduce the minimum area criteria to 10,000 square meters for commercial developments and 10 acres for residential projects

Government's relief on home loans...

noreply@blogger.com (NRI Real Estate) — Fri, 19 Dec 2008 20:28:00 +0000

When public sector banks had announced concessional interest rates on home loans on Monday, developers and huge sections of consumers were not too enthused, since the relief applied only to loans of up to Rs 20 lakh. Now, the government is considering a proposal to broaden the “differential” interest rate regime even on home loans exceeding Rs 20 lakh. Such loans may be split into two parts, where concessional interest will be charged on the first Rs 20 lakh and market rate on the remaining amount. At a meeting with Planning Commission deputy chairman Montek Singh Ahluwalia and finance ministry officials on Wednesday, real estate players demanded progressive slabs on interest rate for home loans. Realty representatives were of the view that banks should extend the relief on interest rate on home loans beyond Rs 20 lakh.

They suggested that banks could charge reduced interest rate of 9.25% on the first Rs 20 lakh and the exceeding amount could be charged at existing market rates. Real estate players, under the aegis of National Real Estate Development Council (NAREDCO), apprised Ahluwalia and other officials of depleting demand and liquidity crunch. They sought credit and increased overseas borrowings but the government made it clear that it would not tinker with the monetary policy again and again to restore real estate boom.”Monetary policy cannot be operationalised to restore real estate boom,” a senior finance ministry official said at the meeting. The real estate players urged the government to further cut interest rates on home loans and restructure debt of developers in order to boost demand in the sector. The developers made it clear that there was no scope to cut prices from the present levels. They argued that they were catering to those in metros with an income of over Rs 10 lakh per annum and affordable housing, according to them, was a flat costing Rs 35-Rs 50 lakh.

In a blunt reply to the realty players and echoing the common man’s sentiments, Planning Commission member Kirit Parekh said, “I can’t buy a home in Delhi without black money.” The grouping also asked for one-year moratorium on repayment as part of restructuring of debts besides demanding revision of upper limit in the recent home loan package announced by PSU banks to Rs 30 lakh from Rs 20 lakh. The builders also demanded that interest should be brought down to 6.5% for loans up to Rs 5 lakh, 7.5% for loans in the bracket of Rs 5 lakh to Rs 30 lakh and 9.5% for borrowings above Rs 30 lakh. The high-profile meeting accepted that the sector needed stimulus and the plan panel chief asked the developers to come up with specific demands by Thursday. According to sources, Ahluwalia said he would forward the suggestions to Prime Minister Manmohan Singh who has instructed the cabinet secretary to work out a package for the real estate sector. After the meeting, Ahluwalia said the realty players explained their issues and different government departments would consider what could be done. The real estate developers told the meeting that transactions had come down by 80%, prices were on a downward trend and new projects were not taking off. The builders, highlighting that 35% of construction cost went in taxes, said banks were not lending to real estate developers which had created severe liquidity crunch in the sector.

Forbes Report - 4 Indian realtors lose Rs1,50,000cr in 8 months

noreply@blogger.com (NRI Real Estate) — Fri, 21 Nov 2008 15:51:00 +0000

Hit by the turmoil in equity and property markets, India's four richest realtors have lost nearly USD 33 billion (over Rs 1,50,000 crore)
since March this year, with the richest of them, K P Singh of DLF, alone accounting for about two-thirds of it, Forbes magazine said.

Listing out the losses suffered by richest property owners in Asia in the ongoing turmoil, in a new report Forbes has named DLF's Singh, Unitech's Ramesh Chandra, Chandru Raheja of Mumbai-based Raheja group and Housing Development & Infrastructure Ltd's Rakesh Wadhawan among the eight realty barons from the region.

While Singh has lost USD 22.2 billion alone since March, Chandra has seen an erosion of about USD 8.6 billion in his fortune during the same period, when Raheja and Wadhawan have lost about USD 1.5 billion and USD 500 million, respectively.

In the latest list of India's 40 richest people published by Forbes earlier this month, K P Singh was ranked at the eighth spot, while Chandru Raheja and Ramesh Chandra were placed at the 20th and 27th positions, respectively.

Realty stocks have been among the worst hit in the ongoing meltdown at the bourses and a number of them registered losses even today when the overall market benchmark Sensex ended with significant gains.

While the Sensex today surged by 464 points or 5.5 per cent, the BSE Realty index dropped by two per cent. Unitech shares dropped by 9.4 per cent, DLF slipped 3.4 per cent and HDIL shed over four per cent.

"K P Singh's fortune is still a hefty USD 7.8 billion, but that's just a fraction of his previous worth. In March, we pegged his fortune at USD 30 billion.

Shares of DLF his real estate company, fell steeply over the past year despite Singh's attempts to boost prices through a buyback," the business magazine Forbes said in its report titled 'Asia's Collapsing Real Estate Fortunes'.

On Chandru Raheja, the report noted that his fortune this month is down to half, from USD three billion in March this year.

Writing on Ramesh Chandra, whose net worth currently stands at USD one billion, Forbes said, "Chandra's fortune has dropped 90 per cent since March.

At that time, we valued his net worth at USD 9.6 billion. Now, it's USD one billion.

"India's real estate slowdown battered his property firm, Unitech. Its shares halved in one day in October on rumours it was on the verge of default. Chandra asked for regulators to investigate."

On Rakesh Wadhawan, the report said he now chairs the realty firm Housing Development & Infrastructure Ltd.
"Housing Development's listing last July made Rakesh a billionaire, but it was only a temporary achievement. We now value his fortune at USD 530 million," it noted.

In an accompanying report, Forbes said, "When we published our list of the world's billionaires in March, it included 15 Chinese real estate kingpins. When we recalculated their fortunes at the end of October, all of those fortunes were smaller, some by billions of dollars.

Their Indian counterparts can commiserate. Our list of the world's billionaires also included seven Indian real estate moguls. Our Indian rich list, published this month, shows their net worths each dropped as well."

Indian Real Estate Companies to woo investors and buyers

noreply@blogger.com (NRI Real Estate) — Thu, 30 Oct 2008 07:42:00 +0000

Given the current global economic slowdown and its impact on the Indian economy, real estate developers have hit upon novel marketing strategies to woo reluctant flat buyers. Real estate players such as Mantri Synergy, Jains Sunderbans, ETA Rosedale and Hirco Palace Gardens have come out with new schemes to attract buyers.

In what is seen as a clear move to shore up the ‘sagging morale’ of prospective buyers, property developers have now come forward to pay pre-EMI (equated monthly instalment) interest on part-money disbursed on the housing loan taken by a flat buyer In the current tight liquidity situation, developers find it difficult to raise finances. When one buys a flat on mortgage, the money is disbursed by his/her bank to the developer in stages. This way, the developer gets the money upfront.

This usual practice obviates the need for him to go in for market borrowing to fund his project.In the changed economic context, the prospective flat buyers have turned cautious and are postponing their buys, anticipating a drop in real estate prices. This has put the developers in a tight corner. In order to retain the buyer, especially during the slump period, the real estate players are now opting to dish out freebees such as payment of pre-EMI.

Only few developers are offering this now for their new projects. It seems more developers are set to follow this when they announce their new projects This is an added advantage to a buyer as it reduces his/her financial burden to a large extent during the construction phase. This cleverly laid out strategy also helps developers retain price lines in a sliding market

HDFC Bank opens branch at Bahrain

noreply@blogger.com (NRI Real Estate) — Thu, 30 Oct 2008 07:38:00 +0000

Private sector HDFC Bank, has opened its first overseas full-fledged branch in Bahrain with a 25-member strong staff. The branch would offer cash management and trade finance solutions to corporate clients and wealth management services for NRIs, a release issued here on Wednesday stated.

“Bahrain has always been the financial gateway and the banking hub to the Gulf with a firm regulatory framework and an overall dynamic financial sector,” HDFC Bank Executive Director Harish Engineer said. “With increased bilateral business partnerships and investments between GCC nations and India, it was logical for HDFC Bank to use Bahrain as its first stepping stone to increase its direct international presence by opening its first full-fledged overseas branch here to tap the growth potential in the region,” he added.

Buyers demand is my command....

noreply@blogger.com (NRI Real Estate) — Sun, 17 Aug 2008 17:44:00 +0000

Developers today are offering discounts, freebies and value add items. This includes discounts in values, freebies in amenities like discounted parking space or lifetime club membership, value adds like providing interiors and ready-to move homes at little discounted rate.
Discounts would mean reduction in the upfront money the customer would be paying to the developer. Discount in parking spaces would mean anything between Rs 10,000 to Rs 20,000. Value-add interiors will include goods like fans, wardrobes and so on.

Buyers can get good options and there is room for negotiations, point out industry sources. Builders are now ready to meet customers and are not wanting to let go of those coming in. Incentives are given across the table, depending on the project. Where there is 100% down payment, the incentives are greater. It can go up to 3-5 % depending on the developer and his need.

Banks are giving advance disbursement facilities, based on the developer and his project besides profile of the buyer . Where the developer gets a lump sum amount in advance at an early stage of the project, he is ready to give more benefits to the buyer. The benefits in such cases would be more compared to a project at its fag end.

Cash discount is the best discount. Developers point out that a home buyer can get a good deal for himself by enquiring with various builder offices on discounts being offered. Brokers too will be in the know of the best discounts available and projects giving value for money.

The overall mood of the home buyer with the interest rate costs and inflation is to wait and watch, feel experts. He, however, adds that in new projects where a builder requires cash flow, he doesn't mind going ahead with discounts. Also where there are five to six builders coming together for a project, they would like to come out of the project at the earliest and would be offering discounts even to the tune of 2-7 %, as they need to run the show. Such discounts will definitely trigger sales amongst the fence sitters. There are builders who have opened their projects at good rates and then after testing the waters, have brought it down.

Industry sources point out that while everybody is offering discounts , few are open about it. The reason being that in real estate traditionally, such non-Diwali offers are interpreted negatively, to mean the builder is under pressure . Many experts argue that if a white good manufacturer can make such offers why can't developers , who are also in business, not want to position their projects and sell it with discounts and other offers. "You are pushing your volumes by doing it," says Vishnu Agarwal.

Experts feel that there is a stigma attached to selling flats at a lower price or giving discounts to sustain sales. In the last few months however, there has been an unprecedented boom and even builders who have not been in favour of rising the prices, have been forced to do so in order to keep pace with their competitors. Now they are again caught in a trap and fear that too much publicity about sops given, would make them susceptible to undercutting in prices from competitors . As the customer goes shopping , there is a funny side to it.

Builders lament that there are customers who brandish their loan sanction letters from banks and tell them they have seventy per cent of the funds and the margin money, and hence would like to know what concessions the builder can give them. There are others who enquire about the sops being offered, only to say they would get back later after consulting their family, but to never come back; they have probably gone to somebody offering better discounts.

Finance Ministers Plea to banks......

noreply@blogger.com (NRI Real Estate) — Sun, 17 Aug 2008 17:36:00 +0000

Finance Minister P Chidambaram requested public sector banks not to increase interest rates for home loans up to Rs 30 lakhs. He also asked the banks to lend more to consumers even as the Reserve Bank of India is trying to moderate credit growth to contain inflation. Taking cues from the North Block, most banks have already left interest rates untouched in the above categories. Chidambaram also impressed upon the banks’ chiefs to increase disbursement of auto loans as well as personal loans by keeping interest rates affordable, sources added. Some banks such as the Punjab National Bank, which have raised interest rates for existing borrowers in these categories, have given assurance that they will take another look at these portfolios.

“(Responding to the monetary policy) Public sector banks have increased their benchmark prime lending rates by 75-100 basis points. Banks have said almost unanimously that it will not impact existing home loans up to Rs 30 lakh, auto loans and education loans,” Chidambaram told reporters after meeting the chiefs of public sector banks here.

Taking a feedback from banks, Chidambaram said credit growth will be brisk this year. He said advances are likely to grow by over 20 per cent, while deposits more than 17 per cent. Most banks have conveyed that they were not witnessing any slowdown in credit demand. However, there was no growth in farm credit due to the relief scheme.

RBI has pegged the credit growth at 20 per cent and the deposit growth at 17 per cent for the banking industry in 2008-09. “Deposits are growing at a satisfactory rate compared to last year. Advances are higher compared to the last year (in the first quarter),” Chidambaram said.

Election 2009 !

noreply@blogger.com (NRI Real Estate) — Wed, 02 Jul 2008 08:03:00 +0000

Isn’t it a sad state of affairs when political scenario starts affecting a country’s growth ! Well, you are about to witness it very soon…India is getting set for elections next year (well, can happen real soon as well with coalition government parties withdrawing support anytime)
So it’s election time, of course which means it’s promises time, it’s ‘being nice’ time, it’s survival time !! Yes, survival is the key and one goes to any extent for that including removing all focus from core issues important for economy’s growth to trivial issues like temple building, caste and community divides etc. Right now the major concern remains the election 2009 !!! The forecasts of gross domestic product growth for fiscal 2007-08 (ending March) are being revised downwards to 8.4-8.6 per cent (growth in 2006-07 reached 9.4 per cent, this reflects the impact of a credit squeeze initiated by the Reserve Bank of India to combat inflation, which reached 6 per cent earlier this year. India's high growth level may not sustain and government's reforms may run out of steam as the main parties concentrate on winning support ahead of elections due in 2009

However to be a devils advocate here, all is not bad in the heaven ! The initiatives taken in past, the sustained economy growth, good monsoon, agricultural reforms resulting into increase in agricultural production and increase in job opportunities will surely support the economy…. A major positive sign is fast growth of capital goods industries and an expansion of infrastructure, which would support the economy in the long run. Besides, foreign portfolio flows are strong which are adding to local resources.
Remittance flow still remains one of the major factor contributing to India’s success and growth story --- Remittances between USD 25 billion and USD 28 billion will help the current account deficit to close to 1-2 per cent of GDP

Going back to the basics - the new age money lenders....

noreply@blogger.com (NRI Real Estate) — Wed, 25 Jun 2008 09:23:00 +0000

They say when the going gets tough, tough gets going….If I apply this to our current real estate scenario in India, I wonder who are the tough people here, is it the builder who is looking for additional resources to meet his financial requirements to complete the unfinished projects or is it the non descript money lender who is now funding this big real multi billion dollar real estate industry in India ????
Actually tough is a situation here ! Yes, the current inflation, financial crunches due to market factors and some policy changes by RBI and government to curb inflation is fuelling this huge demand for liquidity which when now banks are unable to fulfill is falling onto the laps of so called money lenders who are more than willing to exploit the situation….
Well, its not as if money lenders were not part of this real estate industry before however considering the current situation they have become very active due to cash availability and easier lending terms then banks… Now one wonders if this had any impact on the regular guy – that is the consumer !! Yes, of course an end consumer is not actually a part of this game however the burden of higher interest rates that the builders are ready to pay up will somehow eventually fall on the end consumer. Government has taken this step to curb inflation (increasing repo rate, increasing CRR of banks etc) which in turn has led to Banks being cagey about the lending procedures and regulations which in turn makes these builders turn to unofficial loan providers – money lenders, which in turn affects the end consumer ! So, where is the consumers interest in all this ?????? Government is looking at overall reducing the demand in real estate sector to curb inflation, however I feel all this just leads to a consumer feeling all the more insecure about his future…..

Urbanization – The new menace…..

noreply@blogger.com (NRI Real Estate) — Wed, 25 Jun 2008 08:57:00 +0000

Asian Development Bank has raised serious concerns over the rapid urbanization process taking place in Asia and S.E Asian countries. Urbanization leads to higher demands of adequate water supplies and infrastructure. The basic motive to migrate to cities is better quality of life, better livelihood opportunities, however this phenomenon is greatly affecting the available resources in the cities for city dwellers. The ever increasing migrant population as a result of urban growth is going to adversely affect the supply of infrastructural and natural resources.
In most parts of Asia, investments in infrastructure have failed to keep up with economic growth, and where there are new investments, the benefits have not been distributed equally.
Aside from the need to invest in infrastructure, the region needs technical assistance critical to sustain growth. Overall , the urbanization process is bringing in new set of challenges which needs proper attention and planning.
Water harnessing, maintaining green spaces, earthquake resistance , all these issues needs immediate attention to avoid the disasters coming in near future if we continued with the current urban growth rate.

Some good news for NRIs for calling home

noreply@blogger.com (NRI Real Estate) — Mon, 23 Jun 2008 09:42:00 +0000

Calling home has always been a very important routine in our calender over the weekend ! It's definitely one of the sweetest rituals which keeps us connected to the people back at 'home' - India that is.....
I was surfing through some offers to call back home and came across this great one running right now from Airtel. The offer is to avail 4 hours of talk time free ! For me that means 4 weekends going free of cost to call my loved ones back at home !!

I think we should exploit this opportunity....

Real Estate Regulator....

noreply@blogger.com (NRI Real Estate) — Mon, 23 Jun 2008 09:30:00 +0000

A typical NRI or a Indian customer faces a lot of disappointments while going through the process of finalizing the property and actual possession. Lack of transparency, and lofty promises by builders raise the bar for a consumer and all that falls flat when you actually get the possession of the property. It’s pertinent that the gap between customer expectation and builders final offering should be shortened. Indian real estate development industry is fragmented and there is no pre-qualification, resulting into entry of fly by night operators in the sector.
Good news is builders and real estate developers are also thinking on same lines  Confederation of Real Estate Developer Association of India has offered to regulate the process to discourage the unscrupulous players from entering the sector. It has made a number of representations to the government in this regard. The proposed plan talks about government drafting a regulatory act, with the consultation of real estate body which should be adopted by all states. This has been proposed for maintaining not only customers interest but also that of a builder. There are instances that builders are not able to keep their promises in such times when there are some changes in law or government policies. This leads to a customer asking for damages or compensation. If there is a regulator it would be beneficial for a customer as well as builder with regards to their expectations and exceptions

RBI relaxes housing loans restrictions in Banks...

noreply@blogger.com (NRI Real Estate) — Wed, 18 Jun 2008 12:11:00 +0000

RBI has come to the recue of small investors in real estate market making it easier for urban cooperative banks to extend housing loans, Reserve Bank of India has relaxed the risk provisioning norm for purchase of residential properties up to Rs 30 lakh. The central bank issued notification on Monday in pursuance of the annual credit policy announcement made on April 29. The move would provide the urban cooperative banks additional capital for lending more to housing sector.

Experts believe that the RBI has modified the provisioning limit for housing loan to take care of the growing property rates mainly in the urban centers. The risk provisioning earlier was 75 per cent of the loan value between Rs 20-30 lakh. For loans exceeding Rs 30 lakh for purchase of residential property, the banks would have to make a risk provision on 75 per cent of the loan amount.

Liquidity Crisis -- Impact on real estate industry

noreply@blogger.com (NRI Real Estate) — Tue, 17 Jun 2008 07:04:00 +0000

Real estate industry keeps facing the trauma of policy changes… The recent cash crunch in real estate sector has led to major impacts on real estate companies in India. The liquidity crunch is making it impossible for realty companies to organize for funding. The recent slowdown in demand, high interest rates, rising input costs and meltdown of realty stocks have only added to their problems. It is increasingly becoming difficult for ongoing projects to complete with severe liquidity crunch in market. In fact, the situation is so bad that most of them have reported a 50-70% cash shortfall. The lending rate of banks itself is higher at approximately 20% and with developers borrowing from unorganized sector at an exorbitant rate to finish the projects, will just add to the woes.
Couple of issues crop up in your mind considering this situation – what would be the solution to this situation and how will it impact a consumer? The situation is grim with banks also getting more cautious with their lending because of huge defaults, global liquidity crunch and unfavorable stock market conditions hampering capital gains..The only solution that experts are suggesting is raising capital by way of private equity which is surely an expensive proposition. However with current situation there aren’t any alternatives available. Considering this one wonders the impact it will have on end consumer? With land developers borrowing at expensive rates, the chances of property prices going up are high and of course will lead to higher cost burden on a consumer ! Which in turn leads to reduction in demand…..Are we getting into a loop here???

Price Correction in next 3 months

noreply@blogger.com (NRI Real Estate) — Tue, 17 Jun 2008 06:45:00 +0000

Industry pundits are confident that coming 3 months are predicted to be crucial for real estate sector with an anticipation of price correction. We have been hearing of price correction scenario for a long time now, seems like post monsoon will witness the real estate prices going down as much as 15-20%. With the price drop one can expect land owners to wheel and deal in land deals at a lower cost which again is a sign towards price correction phenomenon.

Home loans getting out of reach with RBI raising repo rate

noreply@blogger.com (NRI Real Estate) — Fri, 13 Jun 2008 10:18:00 +0000

Another earth shattering speculation – Home loans interest rates to go up with the Reserve Bank today hiking its short-term lending rate to banks by 0.25 per cent to 8 per cent in the face of surging inflation. Announcing the increase from 7.75 per cent, the central bank said the decision was taken to contain inflationary expectations as the rate of rise in prices touched a 45-month high of 8.24 per cent. The inflation, analysts said, is expected to climb over nine per cent once hike in petroleum prices gets reflected in the official wholesale price index.
The move to increase repo rate, at which the central bank gives short term money to banks in exchange of government securities, has been taken for first time this fiscal. The reverse repo rate, at which RBI borrows money from banks in exchange of the government papers, however, remained intact at six per cent. It had earlier been trying to contain inflation by raising cash reserve ratio– the mandatory deposits that banks keep with RBI.
Following this move, we will soon see country’s largest lender SBI examining its lending and deposit rates on Friday. This will overall see the prime lending rates of the banks going up by about 50 points at least and a revision in bank’s deposit rates as well

Emerging Markets remain hot favorite in real estate sector

noreply@blogger.com (NRI Real Estate) — Thu, 12 Jun 2008 16:50:00 +0000

Western housing going through a tough time or not, real estate continues to be hot in countries with emerging economies. The global credit crunch sent property prices reeling in developed markets from the United States to Spain, but it appears to have done little to slow the real estate sector in places like Brazil and Russia, countries still thriving on a commodities boom and increased access to mortgage financing.
The dire combination of slowing economic growth and rising inflation might be prompting some investors to shun emerging-market bonds and equities, but others are positioning themselves for property values to rise further. Growing urbanization and rising incomes are fueling property demand in the countries with the four largest emerging economies: Brazil, Russia, India and China, known as BRIC. Low interest rates in countries whose currencies are pegged to the dollar, like the United Arab Emirates, and a shortage of homes and offices are keeping real estate values there at records, too.
Soaring consumer prices, particularly vexing for emerging economies, where people typically spend more on food as a percentage of income than in developed countries, are also making inflation-linked rents an attractive hedge. Fund managers say that the overall rise in asset values from inflation could make real estate more attractive, even though it raises borrowing costs for developers and buyers.
When stock markets go down, some investors see physical assets such as property as 'safe haven, One can be upbeat on Mexico and Brazil, where mortgage growth is making middle-class home ownership more affordable, but cautious on India, where residential property appears overvalued, as well as on Turkey. The growing spending power of emerging-market consumers means that retail property in these economies is particularly promising