Real Estate In India

Land acquisition money-spinner for realtors

2007-12-11T03:23:00.000-08:00

Real Estate companies are making a killing even in the land acquisition process. As they announce plans of setting up projects in a particular area and start buying real estate, land prices in and around that area normally shoot up in anticipation of the development.

This usually leads to a huge difference in the price at which the developer buys the first acre and the last acre. However, as his average land acquisition price is much less than the final market price, he makes a substantial notional profit.

Consider this. A well-known developer recently acquired about 100 acres in Delhi’s Najafgarh area. Initially, the company paid Rs 25 lakh per acre and, but the last deal materialised at Rs 1.25 crore. Despite escalating land cost, the company was able to complete the acquisition for about Rs 40 crore, whereas the land is valued close to Rs 125 crore.

Source: economictimes.indiatimes.com

Real Estate, Big game big gain

2007-10-18T21:33:00.000-07:00

The hard money lenders want the same thing you want - a shot at a great investment. Investing involves putting up your time and money with the intention of realizing a profitable return. When you keep this concept in mind, it's astounding just how broad the investing arena actually is. High rise buildings, apartment complexes, condominiums and luxury office space can become a reality - not just a dream!

If your credit rating is bruised and you're pressed for time, securing a hard money loan for a shot at a great commercial property - that's investing.

On the other hand, if an altruistic, financially secure professional discovers that they can make a nice return helping people just like you find the financing they need in order to build their real estate empire- even if all other avenues have failed - that's investing too!

Of course, as a hard money lender works to decide if yours is a worthwhile opportunity, there are other things they'll want to know.

But they knows very well that the real estate gives them a big return for their investment.

A house of dreams

2007-09-28T02:05:00.000-07:00

Every one makes a house, a house of dreams. Every one tries to make it a home for their loved ones and then they try to make it house of dream...

Owning a house to be a distant dream

2007-09-10T01:01:00.000-07:00

Despite a slight drop in interest rates on home loans, real estate prices are still very high in big cities. Experts say it will stay that way for several months. That means most people still can't afford a home of their own.

Vivek and Smeeta together bring in Rs 50,000 every month. After 15 months of negotiating expensive bank loans and leaping property rates, they've decided owning a house in Delhi is Mission Impossible.

"We have been hunting for our own house for quite some time now. But with a budget of Rs 30 lakh we can afford a house only in the outskirts of Noida or Gurgaon, so we decided to go in for a rented accommodation," said Smeeta Verma, Resident.

All across India, middle class families are getting doors slammed in their face. Home loans have climbed by five per cent in the last four years while property prices have doubled in parts of cities like Delhi, Bombay and Bangalore.

Fall in sales

A survey conducted by ASSOCHAM or Association of Chambers and Industries show that sale of residential property in the last three months is 70 per cent lower than the same period a year ago.

Over the last four years, the resale market has dropped by 60 per cent in metros, so nobody is buying property as an investment any more. The survey also found that 33 per cent of those who've taken home loans have been forced to extend their loan period by five years because of rising interest rates.

Prices not to fall

But real estate experts argue that dropping interest rates is not the way to go because property prices are totally out of reach for the average Indian. Every experts NDTV spoke to confirms that prices will not be falling in the next few months in any major metro.

"But if someone is expecting the property prices to fall to 2002 levels, that is quite unlikely. In certain pockets like NCR, Bombay, Bangalore the sheer demand itself will help property price to sustain or go for a minor correction. But for smaller cities we may see a major correction," said Malay Ray, Business Head, DCM Services Limited.

Banks like State Bank of India and Punjab National bank have dropped their interest rate by 0.5 per cent for the festival season, but they deny that this will continue beyond Diwali. And the problem is that middle class India still has nowhere to live.

Source://http://www.ndtvprofit.com/

Indian firm raises $800 million for real estate fund

2007-09-01T01:46:00.000-07:00

Housing Development Finance, one of the largest Indian mortgage companies, said Thursday it raised $800 million from overseas investors for a real estate fund to tap the nation's surging demand for homes and offices.

The company, based in Mumbai, is seeking a 20 percent to 25 percent return for the nine-year fund, Housing Development said. The fund is the biggest dedicated to real estate in India, surpassing the $630 million Sun Apollo Real Estate Fund, according to Real Estate Intelligence.

"Most of the funds are showing good appreciation," said S. Karthikeyan, chief executive at Real Estate Intelligence, a firm based in Mumbai that tracks the property market. "Since we have not seen exits so far, we have to see how much money they actually make when the time comes to sell their property."

The Indian real estate development market may increase more than sevenfold to $90 billion by 2015 from $12 billion in 2005, Moody's Investors Service said in June. Funds of global investment banks are investing in Indian property as the economy grows rapidly.

India will need as many as 10 million new housing units a year by 2030, according to estimates by the Asian Development Bank. The Indian central bank restricts bank lending to real estate since it is considered sensitive and speculative and may lead to losses. Funds are stepping in to fill the financing gap.

Source//http://www.iht.com/articles/

Real estate prices to grow in India

2007-08-23T02:02:00.000-07:00

Real estate developer Ansal Housing and Constructions Ltd today said that real estate prices in the metropolitan cities will grow between 10-15 per cent while 20-25 per cent in small cities of the country during next 1-2 years.

Ansal Housing forecasted this growth despite the claims that property market in India is overheated.

"The real estate prices in Delhi, Mumbai and other metro cities will grow by 10-15 per cent and on the other hand, the prices in smaller cities will increase by 20-25 per cent," Ansal Housing & Constructions Ltd, Director, Kushagr Ansal told reporters here on Friday.

Although the overall scenario of prices in the country tends to remain bullish yet there are certain pockets in which the market has shown sign of overheating, he opined. "There are some places like Gurgaon where the real estate market has reached its peak but in other parts of the country the prices will grow," he said.

"During the development of real estate in Agra and Indore by our company, we observed that the real estate prices in these areas have increased by 20 and 30 per cent respectively," he said.

Meanwhile, Ansal Housing & Constructions Ltd on Friday announced to develop residential township in Karnal at a land of 99 acres which involve an investment of Rs 150 crore.

The company has also plans to develop such townships in Zirakpur, Jammu, Kurukshetra, Panchkula and Yamunanagar in the near future, he said. Having posted a turnover of Rs 200 crore during last year, the company expects an increase in total turnover by 60 per cent in this fiscal.

Source://http://economictimes.indiatimes.com

Investors earn USD 7b from IPOs

2007-08-14T00:23:00.000-07:00

Investors have made handsome profits from initial public offerings (IPOs) in the last one year with a majority of the companies clocking considerable gains in their stock prices during their debut trade.
Shareholders gained more than $6.73 billion on the first day of trade in shares they received in IPOs of 76 companies during the last 12 months, an analysis shows.
Of the 76 companies, shares of as many as 45 firms ended with an average premium of 23 per cent to the issue price on the first day of trade, while 31 firms fell below.
In terms of gain in market capitalisation, real estate developers DLF and Parsvnath led the way, followed by public sector Power Finance Corporation and Aditya Birla Group’s Idea Cellular.
Closing up by eight per cent over the issue price of Rs 525, DLF added Rs 7,680 crore to its market cap at the end of first day’s trade.
After just a few days of trading, DLF crossed the one lakh-crore market capitalisation mark, becoming the first realty firm to achieve the feat.
Another real estate major Parsvnath Developers added more than Rs 4,100 crore to investors’ kitty after the scrip jumped by 75.43 per cent in its debut trade to Rs 526.30, well above its issue price of Rs 300.
PFC had a gain of more than Rs 3,000 crore on its first day on the bourses with a 31 per cent rise to close at Rs 111.55 over its issue price of Rs 85.
Not far behind was Idea Cellular, which cornered Rs 2,780 crore from the market as its scrip rose by 14 per cent.
Other gainers were Sobha Developers and Tech Mahindra, which added a combined total of over Rs 4,674 crore to investors’ kitty.
However, the world’s fastest growing economy China left behind India in terms of wealth garnered by firms in the first day of listing.
Over the past 12 months, out of the 113 IPOs in China, the value of more than a third of firms on the A-share market doubled on their debut.
In terms of the average first-day gains, China has given 97 per cent returns, translating into a combined gain of $24.4 billion.
In India, it was not a smooth ride for all investors who invested in IPOs over the past 12 months as some firms could not make positive returns in their debut trades.
The list of losers is led by oil exploration firm Cairn India, which saw an erosion of more than Rs 4,000 crore in investors’ wealth on its debut day itself after the scrip fell by 14 per cent to Rs 137.5, below its issue price of Rs 160.
Among other disappointing debuts, Fortis Healthcare and House of Pearls Fashion witnessed a reduction of Rs 181 crore and Rs 157 crore respectively in market valuations.
In percentage terms, Broadcast Initiatives, which owns Hindi news channel Janmat, ended with a loss of about 42 per cent over its issue price, followed by marble importer Oriental Trimex and fashion accessories maker Evinix Accessories, with a plunge of 38.65 per cent and 38.54 per cent respectively.

Source://thestatesman.net

RBI concerned over hike in lending to realty sector

2007-07-30T22:05:00.000-07:00

Ahead of the quarterly review of the monetary policy, the Reserve Bank of India has drawn attention to the sharp hike in lending to the commercial Real Estate India sector. Year-on-year growth in such lending has touched nearly 70 per cent , the RBI said in its Report on Macroeconomic and Monetary Developments here on Monday.

The outstanding loans to real estate jumped to Rs 46,295 crore as on May 25, 2007, from Rs 27,285 crore a year ago, a rate of growth that the RBI felt was still high.

However, the string of rate hikes by the RBI has begun to take effect on non-food credit growth. Non-food credit by scheduled commercial banks has moderated to 24.4 per cent year-on-year (Rs 3,67,258 crore) as on July 6, 2007, from 32.8 per cent (Rs 3,70,899 crore) a year ago.

On inflation, the RBI maintains its projection of 4-4.5 per cent. “The resolve, going forward would be to condition policy and perceptions for inflation in the range of 4-4.5 per cent. The objective would be conducive for maintaining self-accelerating growth in the medium term.”

Resource://moneycontrol.com

Yatra Capital posts maiden loss per share of 0.15 eur

2007-07-24T23:17:00.000-07:00

Yatra Capital Ltd posted a maiden loss per share of 0.15 eur for the period from May 26, 2006 to March 31, 2007 on expenses of 1.5 mln eur.

The real estate investment firm, which completed a 100 mln eur placing in December, said no dividends will be paid for the period due to its short tenure on Euronext, and as no investments were made by period-end.

Yatra said it has since committed 72.57 mln eur or 72.57 pct of the funds raised from the IPO, after evaluating over 143.29 mln eur of potential investments.

The company is also in talks to invest 16.5 mln eur and said it expects to be fully invested in a 'relatively short' time.

Chairman Sir Nigel Broomfield said, 'Real estate investment into India continues to provide opportunities for capital appreciation, and we are confident that the investments made to date, and those made from our strong pipeline of investments, will produce the target returns as stated at the time of flotation.'

Yatra Capital is a Jersey-based company which has been set up to invest in Indian real estate. tfn.newsdesk@thomson.com ndi/ran/cm2

Source://hemscott.com

India Property 2007 London calling

2007-07-18T03:51:00.000-07:00

The 4th India Property 2007 – London, India’s only official Property show, being organized by The Confederation of Real Estate Developers Association of India (CREDAI) and Maharashtra Chamber of Housing Industry (MCHI) will be held at Olympia Conference Centre, Hammersmith Road, London from July 20 – 22, 2007.

This exhibition is supported by the Ministry of Urban Development, Government of India, and co-sponsored by LIC Housing Finance.

India Property 2007 London aims at attracting foreign investments from NRIs and other investors to explore vast opportunities available in the Indian real estate industry. Leading developers from India will be participating, showcasing residential and commercial properties, plots and bungalows from Mumbai, Pune, Goa, Bangalore, Delhi, Kolkata, Chennai, Noida, Gurgaon among other places.

Indians constitute the largest foreign-born inhabitants in London. One third of people living in London are born outside the UK and Indians are the largest ethnic group among this overseas population.

London is the financial hub of Europe and one of the three ‘command centers’ for the global economy. Its geographical location coupled with multi-cultural infrastructure, low taxes particularly for foreigners, business friendly environment, excellent air connectivity with a good mix of South African Indian, Gujarati businessmen and large population of Punjabis, has been the deciding factor in making it the perfect venue for this property exhibition. Also, its location would give greater accessibility to Indians living in other parts of Europe to visit this exhibition as well.

Said Mr. Rajni S. Ajmera, President, CREDAI, “With the boom in the economy, Indian Real Estate has emerged as a Global destination for world’s top construction companies, architectural firms & allied industries seeing the huge growth potential that it offers. In line with the growing interest in Indian Realty, our shows facilitate an interaction between the NRIs, realty investors & developers, all under one roof, wherein they get to know firsthand the types of properties available, loan options & other formalities required, in finally procuring their property back home.”

“Indians living in London are well placed in British society, who are in the top level income group, having a high disposable income. With the current boom in the Indian realty, this seems an ideal time for them to invest in property back home, which would give them excellent returns at the same time giving a boost to the Indian economy”, added Mr. Mohan Deshmukh, President, MCHI.

Sharing his views on India Property 2007 London, Mr. Nainesh Shah, Chairman, International Exhibitions, MCHI, said, “We have seen Non Resident Indians from London making huge investments with many of our members in the past through our exhibitions, and this has encouraged all our members to sustain their marketing efforts in this market. We are happy that the investments have become very constant and we hope to offer more in this exhibition.”

According to Mr. J.S. Augustine Co-Chairman, International Exhibitions, MCHI said, “CREDAI & MCHI’s India Property 2007 is official being held for the 4th time in London this year. The interest levels amongst NRIs have increased many-fold in the last three years. NRIs have benefited immensely through our exhibitions which are the only official Property exhibitions held worldwide & have bought peace of mind by making the right choice in purchasing properties from our shows. We are proud that we have played a key role in facilitating such a process for the NRI community at large & we strive for bettering this year.”

CREDAI Assurance

CREDAI and MCHI ensure complete transparency and assurance to the customers throughout the entire transaction and guarantee them the amenities and specifications as promised during the deal. In the event of any dispute the consumer can approach CREDAI to assist them in resolving the same.

About CREDAI

Confederation of Real Estate Developers Association of India (CREDAI) – is the apex body representing associations of real estate and housing developers from all over India. Its purpose is to promote housing and real estate developments in an organized and cohesive manner and provide a liaison with government bodies to effectively represent the views and needs of the industry. It has more than 3000 members spread over more than 17 states in India.

Source://clickpress.com

Wants to invest in IPO? Think again

2007-07-11T23:48:00.000-07:00

Here’s a sobering thought for those who believe in investing in IPOs. Listing gains — the return on the IPO scrip at the close of listing day over the allotment price — have been falling substantially in the past two years. Average listing gains have fallen from 38% in 2005 to as low as 2% in the first half of 2007.

Of the 159 book-built initial public offerings (IPOs) in India between 2000 and 2007, two-thirds saw listing gains. However, these gains have eroded sharply in recent years.

Experts say this trend can be attributed to the aggressive pricing strategy that investment bankers adopt before an IPO. “While the drop in average listing gains is not a good sign, it could be due to the fact that IPO issue managers are getting aggressive with pricing of the issues,” says Anand Rathi, chief economist, Sujan Hajra.
While the listing gain was 38% in 2005 over 34 issues, it fell to 30% in 2006 over 61 issues and to 2% in 2007 till mid-April over 34 issues. The overall listing gain for 159 issues listed since 2000 has been 23%, according to an analysis by Anand Rathi Securities.

Aggressive pricing means the scrip has often been priced at the high end of the pricing range, which would restrict the upward movement of the stock, leading to reduced listing gains for the investor. It also tends to suggest investors should not indiscriminately pump in money into IPOs.

But some market experts point out that India fares better than other countries. “Internationally, there have been periods of negative returns and low positive returns in India should not be considered a bad thing. IPOs are a price discovery exercise and not guaranteed to make money. There could be times when listing returns will be negative,” said UBS Securities executive director and head of India equities Sandeep Bhatia.

Significantly, the phenomenon of low listing gains is taking place at a time when funds mobilisation through IPOs is at a nine-year high and mega-IPOs are taking place. Corporate India raised a whopping Rs 30,914 crore through IPOs in the first six months of 2007.

This year, there were two mega issues from DLF and ICICI Bank. While Delhi-based real estate major DLF raised Rs 9,625 crore, ICICI bank raised Rs 8,750 crore. “Falling listing gains are a function of market corrections. In India, it takes nearly 20 days before a scrip gets listed, during which there can be serious volatility. This year, the volatility in the market has been much higher than last year, which explains the low listing gains,” said Citigroup global markets managing director and head of equity capital markets Ravi Kapoor.

Listing gains, which reached an all-time high of 51% in 2003 fell to 30% in 2006 and just 2% in the first half of 2007. In 2001 and 2002, listing gains were negative.Experts say even when the listing gains are positive, high effective interest costs of heavily oversubscribed issues and high costs of locking-in funds during a bull market further impact the gains to IPO investors. In fact, many of the highly oversubscribed issues led to losses for investors due to, among other things, high interest cost on the invested fund.

There has been a sharp fall in absolute listing gain in recent years. Strong demand for new equity seems to be a major factor for this. At the same time, persistence of low return can quickly reduce investor interest in new equity issues even in a bull market.

The past four financial years have seen IPO mobilisation to the tune of Rs 90,000 crore. Book-built IPOs are usually underpriced, leading to noticeable listing gains for about two-thirds of the issues since 2002. About 15% of the issues resulted in over 60 % listing gain, which on an annualised basis resulted in a nearly 1,100% listing gain. Even when book-built IPOs result in listing losses, such losses are generally limited to 10%.

Among the sectors which saw five or more book built IPOs since 2000, listing gains have been substantial for healthcare, financial services, construction, media, power and technology. Sectors which witnessed either listing losses or small gains include textiles and engineering.
Resource://indiatimes.com

Stay with frontline cos in real estate sector

2007-07-04T01:30:00.000-07:00

Dilip Bhat of Prabhudas Lilladher advises to stay with frontline companies in the real estate sector.

Bhat told CNBC-TV18, “On a long-term basis for any economy, I think real estate is certainly a very integral part of any economic growth or any stock market movement, which is going to go up. All of us know that real estate occupies almost about 11-12% in some of the good markets and even in some of the emerging markets. So in India some or the other the way the real estate structure exists, it hasn’t given that comfort or confidence where they would be able to show entire growth as such and people fear some kind of leakages in terms of profits and all more important probably they have not got a hang as to how the growth is going to pan out.”

He further added, “But against that background it’s important that one has to stay with some of the frontline companies; the real estate companies. I think the real estate has been a huge laggard but going forward I see that some of these companies probably will participate very actively and probably will also be a part of the portfolios in the times to come.”

Disclosure: It is safe to assume that my clients and I have investment interest in the stocks/sectors that have been spoken about.

Source://moneycontrol.com

Small-Town Investment to Bear Fruits

2007-06-25T22:05:00.000-07:00

If you are unable to invest in real estate at the prevailing steep rates in the metros, a good idea would to look at properties in smaller towns and cities which are still at a nascent stage of witnessing a realty boom of sorts.

After reaching dizzying heights in metros like Mumbai, the real estate action is gradually shifting to upcoming smaller towns and cities. Guwahati, Nagpur, Bhuvaneswar, Ludhiana, Surat, Kochi, Indore, Vishakhapatnam, Mysore, Coimbatore, to name a few, have been described as "emerging centres of growth" which are now lending sparkle to India's booming economy.

These emerging growth centres are characterised by low real estate costs, availability of land for development and untapped manpower pool. "Anticipating the latent demand in these markets, a number of real estate developers and retailers have chalked out expansive plans to harness the opportunity," states a Knight Frank report.

This has also attracted the likes of Hiranandani group, Godrej Properties, DLF and Parsvanath to look at tier-II and tier-III towns where they could get their future growth from. As an industry observer said, the rate at Mangalore's City Centre, a prime locality, is just around Rs 2,200 per sq ft., while most of suburban Mumbai seems to be way beyond that.

What is also driving this transformation, according to Knight Frank, are a number micro and macro factors such as sustaining GDP growth, expanding service sector, rising purchasing power and affluence.

Realty is spreading its tentacles to the smaller towns on the back of the Indian IT/ITES sector which is scaling up its operations by exploring these towns in a bid to stay globally competitive. "Rising manpower and real estate costs, plaguing attrition levels and very often risk mitigation have been the key reasons for this movement," the report points out. Considering that IT/ITES contributes nearly 80% of total office space, this sector has been the main demand driver in these cities.

Another variable facilitating real estate growth in India is the growing urbanisation. According to United Nations Population Division, the urban population in India will continue to grow at a rate of 2.5% per annum for the next two and a half decade. As per the Census of India 2001, 41% of the total population of India will be living in urban areas by 2011.

Source://indiatimes.com

Indian property reaches Dubai

2007-06-19T00:21:00.000-07:00

The 8th India Property 2007 — Dubai was organised by The Confederation of Real Estate Developers Association of India (CREDAI) and Maharashtra Chamber of Housing Industry (MCHI). It was held at the Dubai Renaissance Hotel, from June 14 to June 16, 2007.

India Property 2007, Dubai featured some of the prominent names in the Indian real estate industry. Both residential and commercial properties were showcased. Developers from Mumbai, Navi Mumbai, Pune, Nashik, Goa, Bangalore, and Hyderabad were among those who showcased their projects at the exhibition. This exhibition was supported by the Ministry of Urban Development, Government of India, with LIC as co-sponsors.

There are an estimated one million Indians residing in the UAE with Dubai being the hub of commerce and industry, and increasingly developing as a major hub for service industries such as IT and Finance. NRIs in Dubai are well placed in local society.

Asian expatriates account for more than 75 percent of the UAE population with over 40 percent of these less than 25 years of age. NRIs in Dubai are high net worth individuals, which makes
them a potentially rich market for real estate investments in India.

J.S. Augustine Co-Chairman, International Exhibitions, MCHI explained, “India is poised for an unprecedented economic growth. With our GDP crossing 9.5 percent, the opportunities for every Indian, irrespective if they are NRI’s or others are considerable. Even land in the distant villages has appreciated in price. Commercial and Residential are yielding high returns. Rentals have grown. There can not be a better time than now to invest in Indian real estate. CREDAI and MCHI facilitating this for NRIs in Dubai is a boon and they can transact with a lot of trust.”

CREDAI and MCHI will ensure complete transparency for the customers throughout the entire transaction and guarantee them the amenities and specifications as promised during the deal. In the event of any dispute the consumer can approach CREDAI to assist them in resolving the same.

Source://cybernoon.com

Europe’s construction major sets up India base

2007-06-14T21:40:00.000-07:00

Strabag Societas Europaea (Strabag), one of the largest European construction companies headquartered in Austria, is building its base in India in a major way. Zublin International GmbH, a Strabag SE group company, has signed an agreement with the real estate arm of Indiabulls group to jointly bid for a slew of infrastructure projects in the country. The projects range from airports to highways, bridges and metro railways.

A few years ago, Dywidag, another Strabag group firm, was involved in building a technically complicated stretch of the Delhi Metro rail project.

Since the association between Indiabulls and Strabag will be on individual project basis, currently there is no definitive monetary commitment between the two parties. However the companies have agreed to work on each project as equal partners, an Indiabulls’ official said.

According to industry experts, the construction sector is one of the fastest growing sectors in the country. “Infrastructure development is high on government’s priority list. Therefore, it is very logical for global leaders in the infrastructure sector to look at India,” an analyst said.

Indiabulls through Indiabulls Real Estate and Zublin will work together to consolidate the resources and experience of both the companies and jointly work on large specialised infrastructure development projects, a late release from Indiabulls said. At present Indiabulls has presence in commercial and residential real estate space and its entry into the booming infrastructure construction space is being seen as a natural extension of its business.

The Strabag Group, with a revenue of about euro 10 billion (about Rs 55,000 crore) in 2006, is one of Europe’s leading construction groups with nearly 53,000 employees and operations in about 80 countries globally.
For the sake of comparison, Strabag is over four times the size of L&T Ltd, whose engineering and construction division had recorded a revenue of about Rs 13,100 crore last financial year ended March 2007.

source://timesofindia.com

Indian inflation still seen as threat

2007-06-07T04:08:00.000-07:00

India's economy is still showing signs of overheating in some areas despite a drop in overall inflation in recent weeks, the prime minister's top economic adviser said yesterday.

C. Rangarajan, who heads the Indian prime minister's Economic Advisory Council, said he was also concerned over the surge in foreign money coming into India, complicating efforts by monetary authorities to cool the economy.

The Indian economy has grown more than 8.5 per cent annually over the past four years, boosting incomes and consumption, and in the process driving up demand and prices. In some areas, such as real estate india , prices have nearly doubled in two years, stoking fears that the economy might be overheating.

"We are seeing some signs of cyclical overheating," Rangarajan told reporters on the sidelines of a business conference in Mumbai. "This happens in all economies in a period of rapid economic growth when capacities tend to get utilized fully and demand pressures persist."

Rangarajan said, however, that he expected companies across the country to boost investment and expand production capacity.

According to the latest government data, the inflation rate based on wholesale prices eased to 5.06 per cent in the week ended May 19 from 5.27 per cent in the preceding week. The inflation rate stayed above 6 per cent in the first quarter.

The current levels are still high compared to economies that share the same features with India.

India's rapid economic expansion has lured foreign companies, but their increased investment has also fuelled inflation.

Source://thestar.com

Yatra to invest e21.6 m in realty projects

2007-05-30T04:09:00.000-07:00

Yatra Capital Limited, the first Euronext quoted Indian real estate company, has made its first investment in Indian real estate. Yatra has committed up to e21.6 million in equity for a 49% stake in a joint venture with Kolte Patil Developers Limited, to develop three residential sites in Pune, Maharashtra. Yatra Capital raised e100 million in December 2006 to invest in Indian real estate.

Yatra Capital Limited chairman Nigel Broomfield said, “We are very pleased to announce our first investment in India with a leading, experienced and internationally accredited real estate partner. This opens our investment account in India and is in alignment with our strategy of partnering experienced developers to create shareholder value for Yatra.”

All three localities are in key corridors of growth. This investment in Pune underlines Yatra’s stated strategy of investing in fast growing Indian cities. Kolte Patil Developers Limited chairman & managing director Rajesh Patil said, “Yatra Capital Limited through its advisor Saffron Capital Advisors is a very well informed and networked partner that creates value not only through equity investments but also through its extensive knowledge on quality real estate development.” Kolte has over 25 projects to its credit, including the GigaSpace IT Park project in Viman Nagar, Pune. Saffron Capital Advisors Limited, sourced, evaluated and advised on this joint venture. Yatra through its subsidiary K2 entered into an Investment Advisory Agreement with Saffron Capital Advisors in August 2006.
Source://indiatimes.com

India tries to cool real estate boom

2007-05-21T00:19:00.000-07:00

India has tightened overseas borrowing rules, making it harder for less creditworthy and smaller local companies to raise funds, which analysts say will curb soaring capital flows and calm the hot real estate sector.

"It looks like the move is basically to control capital flows and cool the real estate sector," said D.K. Joshi, principal economist at credit rating agency Crisil.

The use of overseas borrowings for development of integrated townships would also be stopped. Rising mortgage rates and a doubling of property prices in major cities in the past two years have lifted home prices beyond the reach of middle-class Indians.

Source://nzherald.co.nz

Boomtown Faridabad

2007-05-14T00:08:00.000-07:00

MARKETING executive Kamal Krishna is set to move into his new Faridabad flat in Green field Valley. “It’s green, it’s open, and it’s cheaper,” says the 27-year-old who started house-hunting two years back with his wife, a fashion designer.

After looking through the saturated real estate markets in Delhi and Gurgaon, they zeroed in on Faridabad. Why? “It’s just 30 minutes from my office at Nehru Place,” Krishna says. “I was looking for a house in Gurgaon, and the closest I could come to finding an affordable house was on Sohna Road which was nowhere near civilisation.

“Faridabad, closer to Delhi, offered the same in about half the price.”

Like Krishna, many are now heading towards Faridabad, which is now shedding its tag as a smoky industrial town that hosts the annual Surajkund crafts fair. It’s slowly graduating into a suburb offering a greener and economical housing option for those looking to stay around Delhi.

As property prices go through the roof at Noida and Gurgaon, Faridabad is on its way to make it big. And with builders eyeing the trans-canal land acquired from villages along the Yamuna and the proposed Taj Expressway corridor, Faridabad is expected to have 20,000 houses up for sale in the next two years.

Real estate dealer Harish Arora, who has seen a huge increase in number of property sales in the past two years, says: “People can buy a flat and a 1,000-square-foot bungalow plot for Rs 3,000-Rs 4,000 per square foot. In Noida and Gurgaon, the prices are at least double, if not more.”

Another factor that goes for Faridabad, he says, is its proximity to Delhi: Contrary to common perception barring traffic jams at Badarpur, it is closer to Delhi and Gurgaon compared to Greater Noida.”

Next change: chic
Two multiplexes and half-a-dozen multi-cuisine restaurants later, Faridabad is transforming. And with groups like Triveni, Omaxe, Achiever, SRS, Eldeco, Eros and Zion jumping into the real estate bandwagon, builder Sunit Sachar says the party has just begun. “We will have a dozen malls along NH-2 in the next couple of years, and Taj Expressway connecting Noida and Faridabad is on track,” he says.

“The suburb is gradually growing to be the next Gurgaon.”

But real estate agents warn that the bubble might just burst if developers and the government fail to build on infrastructure to support the growing population, 26 lakh at present.

“The expressway to Gurgaon is a mess and flats in Greater Noida are lying vacant due to lack of connectivity,” Arora says. “If the Badarpur flyover project takes off, people who are merely investing here and are slightly hesitant to move in will do so immediately.

“Otherwise, the 20,000 homes that may come up will have no takers.”

He admits that 70 per cent of the present market comprises investors, not people who want to live in these flats under construction.

Needed: infrastructure
Shubo Sengupta, an advertising executive, is wary of shifting into his Faridabad flat for these very reasons. “Faridabad is too downmarket, lacks infrastructure and has no value in Delhi’s snob market,” says the Greater Kailash resident.

But the reason why he wants to move base from GK — “too crowded and expensive” — is precisely what real estate developers say are Faridabad’s USP.

Krishna, who lives in a rented accommodation at Faridabad’s Ashoka Enclave in Sector-37, says, “Infrastructure is important but it will come up only if people start living here. It is a consumer-driven market. And Faridabad has the potential of being an alternative to Delhi.”

Source://expressindia.com

Roller coaster ride for realty stocks

2007-05-08T23:26:00.000-07:00

It was an extremely volatile day’s trading for real estate stocks, a day after Delhi-based DLF announced that it had received approval for its mega initial public offering.

Most real estate india stocks including Unitech, Indiabulls Real Estate, Sobha Developers, Ansal Properties, Parsvnath Developers, Akruti Nirman, among others, shot up in morning trade, but profit booking during the latter half of the day brought down the stock prices below Monday’s level at close.

Unitech, which ended higher by 4.74 per cent or Rs 20.05 to Rs 443.45, was the only notable gainer on Tuesday, while Indiabulls Real Estate (down 3.84 per cent to Rs 351.40), Sobha Developers (down 1.12 per cent to Rs 854.85), Parsvnath Developers (down 1.19 per cent to Rs 308), Ansal Properties (down 3.54 per cent to Rs 273.75), Orbit Corp (down 3.92 per cent to Rs 196) and Akruti Nirman (down 4.22 per cent to Rs 382.40) slipped on heavy profit booking in closing hours.

Analysts, however, feel that the recent fall in prices, make some of the real estate stocks an attractive investment opportunity for investors.

Suman Memani of Emkay Securities anticipates a bright future for the real estate sector, considering the investments that are being made in commercial real estate. “Residential sector will still take some time to normalise. It may see a bit of a slow down,” he said.

The fact that the Reserve Bank of India has reduced risk weight on home loans of less than Rs 20 lakh from 75 per cent to 50 per cent is also another positive factor.

All the real-estate stocks were on fire in morning trade on heavy buying from investors. Indiabulls Real Estate hit a high of Rs 384.80, up 5.29 per cent from previous close, earlier in the day, before profit booking pulled the prices down by close. Similar situation was witnessed in other counters as well.

For instance, Sobha Developers was trading at about 3 per cent high from Monday at Rs 889, while Ansal Properties was trading at Rs 294.35, up by 3.71 per cent from previous close, in early trading on Tuesday.
Source://business-standard.com

US firm picks 15% in Vipul for Rs 234 cr

2007-04-29T23:49:00.000-07:00

Wachovia Corporation, one of the largest diversified financial institutions in the US, has picked up about 15 per cent stake in realty firm Vipul Ltd for Rs 234 crore and plans to invest up to one billion dollar (about Rs 4,100 crore) in real estate India market this year.

"WDC Ventures Ltd has subscribed to 14.95 per cent equity capital for Rs 233.92 crore under preferential allotment," Vipul Ltd Managing Director Punit Beriwala said.

Wachovia has invested in Gurgaon-based Vipul Ltd through its company WDC Ventures Ltd. The promoter's share would come down to about 62 per cent after the stake sale. Vipul would deploy the funds in projects being developed by the company, besides setting aside some fund for acquiring properties, he added. Elaborating its India Plan, Wachovia Director-Real Estate Capital Markets Sandip Kundu said: "In 2007, we plan to deploy two billion dollars in Asian real estate market." "In India opportunity is huge. We may end up putting over

50 per cent in India," Kundu said. Funds were not a constraint and the company had enough money to invest in Indian real estate market, he added. Kundu said the company was in India for the last 11 months and this was its first investment in a listed company.

It had earlier invested money in 6-7 ventures, Kundu said but refused to divulge the amount and the name of the firms. Wachovia is the largest bank in South-East US with assets of 700 billion dollars and market value of over 100 billion dollars. It provides retail banking, brokerage, asset and wealth management, and corporate and investment banking products and services in the US.
Source://indiatimes.com

Real Estate counters back on bulls` list

2007-04-24T21:40:00.000-07:00

Real Estate stocks had been on the receiving end in recent times following increase in interest rates by RBI over last two months. On March 30, RBI had unexpectedly increased its overnight lending rate by a quarter percentage point to a 4 1/2 year high of 7.75% to tame rising Inflation rates.

The RBI decided to keep key lending rates unchanged to support slowing economic growth, taking in consideration that five increases in the past year were enough to tame inflation. This decision brought the Real Estate stocks back in action.

Further, India’s central bank announced that it had asked the banks to charge less from individuals for home loans, as cost to buy a house has risen after five interest-rate hikes in the past year. It declared that they would reduce risk-weighting on individual loans to 50% from current 75%. So by taking such measures rising loans rates could be controlled making it more affordable for the buyers, especially first time buyers to purchase property.

Source://indiainfoline.com

Stop Renting! Go For A Home!

2007-04-12T01:21:00.000-07:00

There is a major misconception that homes are unattainable by many people. With the amazing variety of mortgages that are available in today's financial world it has become easier for people to get that first home that they have always dreamed about.

But, no matter what your financial situation is, you will need to do some research and investigate the mortgages that are available to you. Only then can you make an educated choice about what will be right for you now and in the future.

Some of the facts that you will have to consider are things like monthly payments. How much can you make without putting other bills and responsibilities in jeopardy? You need to carefully plan your financial future to be ready for any emergencies or expenditures without affecting your ability to make your mortgage payments. Now, take some time and really shop the market for a mortgage that is right for you. Beware of mortgages that sound like they are too good to be true, they usually are.

Think of this in terms of how long you plan to be in the home. A longer mortgage, amortized over 30 years will end up costing more in interest but should make the monthly payments more manageable then a shorter term mortgage.

One of the most important things that you should remember in setting up financing for a home purchase is that it should be done long before you start looking for a home. There is nothing worse than having your heart set on a home only to have it snatched out from under you by another buyer who had their home loan ready to go while you still needed to get yours. Don't let this happen to you, get out there and get approved for a mortgage and get the home of your dreams.

Indian Realty Fund to invest $100m

2007-04-10T22:18:00.000-07:00

India’s IL&FS Realty Fund said on Tuesday it would invest $100 million in a start-up property developer QVC Realty Ltd that would build hotels, homes and townships.

IL&FS Realty, the real estate india fund of private equity firm IL&FS Investment Managers Ltd, will own 100 per cent of QVC. As the projects come up, founders of QVC will get equity stakes for an undisclosed amount, a top official said.

“We have committed $100 million and the management will take a stake on delivery,” Shahzaad Dalal, vice chairman & managing director of IL&FS Investment Managers, told reporters.

QVC will develop 100 acre township in Gurgaon, near New Delhi, and is tying up 100 acres in the technology hub of Bangalore for a similar project, Prakash Gurbaxani who founded the firm in January said.

The combined market value of the two projects could be Rs30 billion ($699 million), said Gurbaxani, a former executive at the Indian joint venture of Tishman Speyer and ICICI Venture.

Source://thenews.com

S’pore’s F&N in talks on Indian property deal

2007-03-29T01:21:00.000-07:00

Singapore beverages and property group Fraser & Neave (F&N), brewer of Tiger beer, is in talks to enter the Indian real estate sector, a company official told Reuters on Wednesday.

F&N, which already owns a brewery in India through its Asia Pacific Breweries unit, said it was focusing on residential and serviced apartments in India Properties cities like Mumbai, New Delhi, Bangalore, Hyderabad and Chennai, but had yet to conclude a transaction.

“We are currently discussing potential opportunities with various parties and hopefully we can close our first deal in due course,” company spokesman Hui Choon Kit told Reuters.

He declined to be more specific about the potential partners or the size of the investment. Under Indian foreign direct investment rules, the minimum equity for foreign investors in real estate joint ventures is $5 million. He said that due to continuing growth in the Indian economy, “demand for quality housing, offices and hospitality will continue to outstrip supply”.

F&N’s property unit develops shopping centres, residential homes and serviced apartments in Singapore and has residential projects in Britain, Australia, New Zealand, China and Thailand.

In the financial year to Sept 30, 2006, the property unit contributed earnings before interest and tax (EBIT) of S$350 million ($231 million), or nearly 60 percent of total EBIT.
source://dailytimes.com