NRI's Looking for property in India?

Neemrana Realty Scene - Lucrative Investment Destination

noreply@blogger.com (NRI Real Estate) — Mon, 18 Feb 2013 01:38:00 -0800

Neemrana in Alwar region, located off NH 8 is becoming a prominent destination amongst investors for the potential it offers for real estate development. About 110 Kms from Gurgaon, Neemrana while was so far known for its historical prominence has been in news lately for major commercial and projects proposed by Rajasthan government. The launch of Global City and special economic zones and Kundli Manesar Palwal expressway, all these developments make this a very lucrative investment destination. Having visited the site personally and seen the frantic pace of development there, I can say that that this destination is becoming a educational and industrial hub which will fuel demand for real estate for that region itself and has a good potential for some lucrative returns The government of Rajasthan has projected Neemrana as a ‘Global City’ by improving infrastructure and providing room for industrial, residential and institutional set-ups. With fast improving infrastructure and smooth connectivity along the NH-8, Neemrana is emerging as a ‘little Japan’ with the presence of industry majors like Daikin, Nissin Brake, Toyoda, and Mitsui, which have already set up huge state-of-the-art manufacturing facilities here. There is a JAPANESE ZONE there which houses all of these and many more industrial houses to set up there. Which in turn is leading to plans for five star hotel establishments in near future. Apart from the Japanese zone, other industry giants like Parle Biscuits, Hero Moto Corp, Terry-Plus India, Liberty Whiteware, Havells, Tops and Rochees Breweries are running successfully along with other industries in Neemrana within the RIICO (Rajasthan State Industrial Development and Investment Corporation) Zone. Neemrana is being transformed into an education destination with nearly 38 universities receiving sanction to open their institutes here. NIIT, Raffles, Rai University, School of Aeronautics, SMEC are already operational here. The Delhi-Mumbai Industrial Corridor is a $90 billion infrastructure project coming up with the financial and technical aid from Japan, covering an overall length of 1,483km between Delhi & Mumbai. Over the last few years, this town known so far for its historical fort only has been slowly emerging as the next industrial hub. Neemrana is now on the radar of top investors and IT giants as their next business center which has further spurred its growth. The entry of the BPO industry and the Japanese MNCs has played a vital role in taking property prices to unimaginable heights here. No wonder with all these developments, there is a huge spur in residential and commercial activities. The developing zone is turning into a promising real estate destination with modern gated communities, townships, residential complexes, IT hubs and corporate houses. Neemrana’s real estate is being propelled by multiple drivers, with its strong industrial, retail and hospitality base contributing to this in a large measure.

Spotlight - BHIWADI

noreply@blogger.com (NRI Real Estate) — Tue, 30 Oct 2012 23:28:00 -0700

Bhiwadi lies on NH-8 i.e., the Delhi Jaipur highway. It is in close proximity to Gurgaon and is termed as the Gateway of Rajasthan. Bhiwadi is one of the emerging real estate destinations in NCR. The place is emerging as the NCR's next big industrial hub and has seen growth of affordable residential developments within the last few years. Some of the biggest names in the real estate business have come up with their projects here. This town is a fast-developing Tier II town, providing all the lifestyle facilities of a big city. With high property rates in Gurgaon and Manesar, Bhiwadi has come up as a profitable and affordable locality for real estate investors and buyers. Bhiwadi is in Rajasthan's Alwar district and has an excellent connectivity with eight lane NH-8 through Dharuhera-Bhiwadi bypass road. This town is only about 55 kilometres from the Delhi International Airport, 90 kilometres from Alwar, 40 kilometres from Gurgaon and around 60 kilometres from Faridabad. This area will also be connected with the upcoming Kundli-Manesar-Palwal Expressway which is a future connectivity promised in 2021 Gurgaon-Manesar Master Plan. Therefore, this area holds vast potential for robust growth in the near future. The development that started along NH-8 in Gurgaon has spread to Manesar, Dharuhera and now Bhiwadi, and is likely to go upto Alwar. We feel that this city gives value for money to the investors and the buyers. This development has also increased its pace with the intervention of an industrial hub, i.e. The Rajasthan State Industrial Development & Investment Corporation Limited (RIICO) is aggressively pushing for rapid development and major investments into the town. The infrastructure facilities in the town are increasing with each passing day, and developers have acquired land on both sides of NH-8 where they have launched their plotted developments and group housing projects. With the promise of good employment opportunities, a better standard of living, and good connectivity at very affordable prices as compared to other regions in NCR, this place offers better facilities at affordable prices and is well within reach of the middle class who wish to reside within the NCR. The availability of apartments and independent floors is greater, as compared to plots. The first developer to move in this area was Ashiana Homes. With the rise in demand, the projects like Ashiana Aangan, which were launched at the price range of Rs 2,200 per sq ft, are now selling in the range of Rs 3,400 per sq ft. The prices in this area are still reasonable if compared to other areas of Gurgaon. The property rates here have showed stable to positive values and have witnessed an average hike of 12 per cent per annum since the last 2-3 years. Some top key players in the real estate have come up with their residential projects in the area, like Ashiana who has launched and handed over seven group-housing projects, namely Greens, Bageecha, Gulmohar Park, Gardens, Villas, Rangoli and one senior-living housing society 'Utsav'. Other players are such as Avalon, Nemai, Terracity, M2K, Cosmos, Essentia, Omaxe and Krish Group have also come up with their projects in this area. We feel that the existing selling prices of the apartments in Bhiwadi are still reasonable, i.e., one can get a 2BHK apartment at the price range of Rs 30-40 lakh as compared to Sohna road and Manesar, which would easily cost Rs 60-80 lakh. This area will see a good growth in property prices within the next 3-5 years with the establishment of the industrial area. Bhiwadi can therefore be looked as a good location for long term investors. With an investment period of 2-3 years, one can expect a minimum of 25-30 per cent returns on their investments. Source

Housing prices up 6.7% in Q1: RBI

noreply@blogger.com (NRI Real Estate) — Tue, 30 Oct 2012 23:24:00 -0700

According to RBI, there has been a 6.7 per cent growth in housing prices across the country in the first quarter of the current fiscal, Reserve Bank said today. "The Reserve Bank's quarterly House Price Index, based on data for nine cities, indicates a Q-o-Q increase of 6.7 per cent at the national level," the RBI macroeconomic and monetary developments report released on the eve of monetary policy announcement said. On a year-on-year basis, the price increase has been recorded at 24.1 per cent, the report revealed. The index takes into account price situations in nine cities - Mumbai, Delhi, Chennai, Bangalore, Ahmedabad, Lucknow, Kolkata, Jaipur and Kanpur, it said. Housing prices in the financial capital grew at a tepid 3.1 per cent for the quarter ended June, while growth in Kolkata was the fastest, at 28.9 per cent, it said, adding Bangalore and Kanpur witnessed a fall. Going by transaction volumes, there was a 6.4 per cent rise on a sequential basis, the quarterly index showed, while on a Y-o-Y basis it stood at 9.3 per cent, it said. Source

Will Indian companies still score ?

noreply@blogger.com (NRI Real Estate) — Sun, 28 Oct 2012 05:58:00 -0700

With rising prices, stock market crash, rupee depreciating and oil prices hitting the roof, Indian growth story has definitely hit a road block. Foreign investments worth $3 billion were withdrawn from stock market in Q1, recent crash is no encouragement either. However, wasn’t it an expected phenomenon? The success story has been continuing over last 5 years with growth rate an envy of all the other nations of the world, with Indian economy reaching its plateau with increased domestic demands causing inflationary pressures resulting into a bitter halt.
Now, this scenario does sound too grim, isn’t it ? However one must also observe the fact that although India might not witness a impressive growth rate of 9% but she will still be witnessing a strong 7.5% growth rate with the current scenario in this fiscal year.
On a broader scale one can comment that growth in infrastructure is in essence actual economic growth which does seem to be taking a back seat in the current scene. Where India does have its own shares of issues with infrastructure, manufacturing, attracting foreign investments, however the robust & strong sectors like IT, pharmaceuticals and property sectors compensate for them. These sectors are not only generating revenue from overseas markets, however are also able to fulfill huge domestic demand which has come into play with rising salaries.
Now, with the current situation does India still remain any which way attractive to investors? Investors need to focus on areas that are organically growing and are not dependent on government reforms and are not affected with government policies. India will surely be a unique market place witnessing highs & lows in short spans however the consistent growth pattern will be the constant factor assisting investors in their interest in India. The biggest challenge will ofcourse remain to maintain cash flow with lowest debts. Indian companies have on the whole grown even with changes in government policies, which should continue as a trend in future as well.

Improvements in Indian Economy as per latest Morgan Stanley Report

noreply@blogger.com (NRI Real Estate) — Sun, 28 Oct 2012 05:58:00 -0700

Indian economic scenario is improving as per latest reports from Morgan Stanely While the growth indicators for Indian economy are showing signs of stabilization, the macro economic environment still needs addressing and reforms to kick in, particularly inflation which is affecting Indian economy at a very core level right now The third quarter specifically saw some activity in real estate sector & government projects and witnessed some sequential improvement in regions exports, however the macro environment in its current form is what is hampering the overall growth to a big extent The recent reforms push by government amid the politically unstable environment – allowing FDI in multi brand retail segment, aviation and broadcasting, opening up pension segment to foreign investments and raising the FDI cap in insurance to 49%, are all positive signs and such reforms will lead to positive investment sentiment Having said that, we must be cognizant of the fact that there these will have impact in long run and no quick correction of the fiscal deficit can be expected in very near future Some facts for consideration are as follows :-  The April-August central government expenditure and fiscal deficits have risen by 19.7 per cent and 23.4 per cent respectively, higher than the Budget targets for the full year  Government spending accelerated to 32 per cent year-on- year (YoY) in August even as gross tax revenue growth slipped to 7.9 per cent.  The Wholesale Price Index based inflation accelerated to 7.8 per cent YoY in September, from 7.6 per cent in August, due to the impact of diesel price hike. Retail inflation accelerated to 10.3 per cent YOY in Aug from 9.8 % in July The report further added that no major efforts by the government are likely to manage rural farm workers' wage growth or improve the productivity of these workers and accordingly the "correction in macro stability indicators, particularly inflation, will remain very slow".

For stability, NRIs turn towards realty

noreply@blogger.com (NRI Real Estate) — Thu, 27 Sep 2012 09:26:00 -0700

Recently an acquaintance, a fund manager by profession, relocated to India to set-up a domestic private equity fund. He had invested in a Mumbai residential property strategically located close to the primary business district and an international school. This investment, done a few years back, helped him crystallise his plans for relocation to India and start his venture without spending time in finding the right location, house and school. What I found most interesting was that he had not even considered eventually relocating to India when he bought this apartment. He had simply done it for investment five years previously. The Way Of The NRI To date, I have not met a single NRI who is not keen to buy real estate in India. Home ownership in this country is one of the most satisfying means available to them to stay connected to their motherland. Very often, such investments in their country of origin help them to maintain their relationships back home while they seek their fortune abroad. Another NRI businessman based in Europe and now relocating to NCR on the heels of the Euro crisis, was seeking to build a local business base here. Achieving this while resettling family on all fronts has not been an easy task for him. He is on the lookout for the ‘best’ location for a residential property in NCR and naturally finds the cost of properties in the prime areas staggering and beyond belief. He had not considered investing in a property earlier. Completely out of sync with the market dynamics back home, he blithely assumed that his foreign-earned savings would make finding a luxurious home a breeze. He was ill prepared for the astronomical ticket sizes that now prevail. Over the past few years, we have noted that NRIs are investing in residential real estate specifically in large Indian cities to build a back-up base in the country. This particularly applies to NRIs with professional/entrepreneurial ambitions who intend to set up businesses in these cities in the future. After the 2008-09 global financial crisis, India has stood out as a showcase example of financial stability, specifically in terms of its conservative banking sector. More than anything else in the past, the crisis caused NRIs to seriously contemplate owning homes in India as their rattled confidence in all things foreign gave way to a yearning for familiarity and stability on both on the personal and professional fronts. Rules Of Engagement NRIs have no restrictions limiting them with regards to how many commercial or residential properties they can own in India. However, there are restrictions on the repatriation of sale proceeds, which is limited to two units. Effectively, this means that NRI face no restriction while investing into commercial or residential real estate in India. However, when a NRI decides to sell and take the money back to the country of residence, he can do so with the sale proceeds of only two units. NRIs can invest into real estate by remitting funds to India through normal banking channels, or by invest through funds in NRE/FCNR/NRO accounts maintained in India. They cannot make payment via traveller’s cheque or foreign currency notes. They are also restricted from making any payments outside India or settling payments through exchange of funds outside the country. NRIs can avail home loans from institutions approved by the National Housing Bank, and loan repayment can be done either through inward remittances, debit to NRE/FCNR/NRO account, via rental income earned in India or by borrowing from close relatives residing in India. NRIs can also avail of home loans from the employer in India, provided specific terms and conditions listed by RBI are met. NRIs can mortgage residential property in India with a financial institution without any approval from RBI and a foreign financial institution with prior approval from RBI. NRIs can rent out their property without the approval of the RBI. Rent received can be credited to NRO/NRE account or remitted abroad. Authorised dealers have been empowered to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/PIOs who do not maintain an NRO account in India, based on appropriate certification by a chartered accountant confirming that the funds proposed are eligible for remittance and that applicable taxes have been paid or provided for. No one can exactly predict the fate of any currency, or the stability of any economy. Economies are notoriously ‘subject to market risk’ — for instance, no one had expected that west Asia would see political uncertainty a few years back. However, when it comes to personal and career stability, there must be no margin for error. The current trends suggest that more NRIs are taking important decisions with regard to owning residential real estate in India as a bulwark against uncertain times. Source

NRI real estate investment norms simplified

noreply@blogger.com (NRI Real Estate) — Thu, 27 Sep 2012 09:23:00 -0700

The purchase and sale of immovable properties in India by a Non Resident Indian (NRI) or by a Person of Indian Origin (PIO) is really a very simple and easy affair with not much hassles and problems. For a detailed and authentic answer one should always refer to the Foreign Exchange Management (Acquisition and Transfer of Immovable Properties in India) Regulations, 2000 as amended from time to time. The above regulations have been notified by the Reserve Bank of India vide Notification No. FEMA/21/200-RB dated 3rd May, 2000. Likewise, to get a latest update on the subject the investors may also very carefully go through the latest Master Circular on Acquisition and Transfer of Immoveable Property in India by Non Resident Indians/Persons of Indian Origin which has been issued by the Reserve Bank of India vide Master Circular No.4/2012-13 dated 2/7/2012. Before going further to analyse the different provisions of the law relating to acquisition and transfer of immovable properties in India by Non Resident Indians as well as by Persons of Indian Origin it would be worthwhile to know and understand the legal definition of these two entities as per the Foreign Exchange Management Act. As per Notification FEMA-5 /2000 dated 3.5.2000 as amended from time to time, a Non Resident Indian (NRI) is a person resident outside India who is citizen of India or is a person of Indian Origin. Likewise, the definition of Person of Indian Origin (PIO) means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who (i) at any time, held Indian passport, or (ii) who or either of whose father or whose grandfather was a citizen of India by virtue of Constitution of India or the Citizen Act, 1995. With regard to acquisition and transfer of property in India by an Indian Citizen resident outside India it is specifically provided that a person resident outside India who is a citizen of India may - a) acquire any immovable property in India other than agricultural/plantation /farm house, and b) transfer any immovable property in India to a person resident in India. c) transfer any immovable property other than agricultural or plantation property or farm house to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. As regards the Acquisition as well as transfer of Property in India by a Person of Indian Origin (PIO) the Regulation 4 of the above mentioned regulation specifically states that a person of Indian origin resident outside India may - (a) acquire any immovable property other than agricultural land/farm house/ plantation property in India by purchase, from out of (i) funds received in India by way of inward remittance from any place outside India or (ii) funds held in any non-resident account maintained in accordance with the provisions of the Act and the regulations made by the Reserve Bank under the Act; (b) acquire any immovable property in India other than agricultural land / farm house / plantation property by way of gift from a person resident in India or from a person resident outside India who is a citizen of India or from a person of Indian origin resident outside India; (c) acquire any immovable property in India by way of inheritance from a person resident outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of these Regulations or from a person resident in India; (d) transfer any immovable property in India other than agricultural land/farm house/plantation property , by way of sale to a person resident in India; (e) transfer agricultural land/farm house/ plantation property in India, by way of gift or sale to a person resident in India who is a citizen of India; (f) transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian Origin resident outside India. Article Courtesy

Real Estate demand fuelled by returning NRI’s

noreply@blogger.com (NRI Real Estate) — Tue, 8 Dec 2009 22:47:00 -0800

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, 1 Dec 2009 05:40:00 -0800

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 06:28:00 -0700

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 04:57:00 -0700

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 04:55:00 -0700

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 04:26:00 -0700

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 10:54:00 -0700

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 11:23:00 -0700

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 11:18:00 -0700

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 12:28:00 -0800

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 07:51:00 -0800

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 00:42:00 -0700

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 00:38:00 -0700

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 10:44:00 -0700

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 10:36:00 -0700

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, 2 Jul 2008 01:03:00 -0700

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 02:23:00 -0700

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 01:57:00 -0700

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.