Realty Digest

Realtors Shift Focus on Integrated Townships

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:26:00 +0000

After the slowdown in demand for residences, developers and international property consultants have realised that 'integrated townships' are the next trend across the country. Many realty majors are focusing on the development of integrated townships. Even as DLF Ltd is planning to develop 4,840-unit ‘Dankuni’ township in Kolkata, the Housing Infrastructure Development Corporation (HIDCO) is developing 9,334-unit 'Rajarhat' township in the periphery of Kolkata. Emaar Group is planning to develop 520-unit 'Boulder Hills' township in Hyderabad. Parsvanath also is planning to develop 2,500-unit township in Chennai. This is according to a recent market overview done by Jones Lang LaSalle Meghraj.

Single-family Home Starts in the US Plunges Down

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:24:00 +0000

Single-family housing starts fell more than anticipated in September, falling to the lowest level in a quarter century and indicating the real-estate slump intensified even before the recent credit meltdown. Construction began on 817, 000 houses last month, down 6.3 percent from Augusts’ 872, 000 level that was lower than previously estimated, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.3 percent to 786, 000 pace, the lowest level since November 1981. Starts were projected to fall to an 872, 000 annual pace from a previously estimated 895, 000 million in August, according to the median forecast of 74 economists polled by Bloomberg News. Estimates ranged from 840, 000 to 935, 000. Compared to September 2007, work began on 31 percent fewer homes. Construction of single-family homes dropped 12 percent to a 544, 000 rate, the fewest since February 1982. Starts of single-family houses dropped to record lows in three of four regions in September, led by a 24 percent slump in the Midwest.

Malls Coming Up With Hotels On Premises To Attract More Customers

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:21:00 +0000

The new mantra for city malls is to entice customers into staying at the mallsonly. For instance, the Select City Walk Mall in Saket, recently unveiled 83 plush suites spread across five levels, complete with living room, kitchenette and designer bedrooms, called Svelte Suites. These suites are classified as Executive, Royal, Grand, Deluxe and Presidential suites. Their rates range from Rs 12, 000 to Rs 30, 000 per night, with room sizes ranging from 450 sq ft to 1,100 sq ft. The Ambience Group will soon have a luxury 319-room hotel and 90 service apartments by the Leela Group in the Ambience Mall in Gurgaon. The hotel will cater to the tourist inflow expected during the 2010 Commonwealth Games. Sun City Developers, builders of the Cross River Mall, are also planning a mega project of 40 lakh sq ft in Greater Noida, which will house retail space, offices, a five-star hotel and an entertainment island. As real estate developers fight to offer better amenities, the customer is spoilt for choice.

Realtors In South Adopt New Strategies To Woo Buyers

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:17:00 +0000

Considering the current global economic slowdown and its impact on the Indian economy, realtors are coming up with novel marketing strategies to woo reluctant flat buyers. Realty players such as Mantri Synergy, Jains Sunderbans, ETA Rosedale and Hirco Palace Gardens have come out with new schemes to attract buyers. To lift up the 'sagging morale' of prospective buyers, property developers have now come forward to pay pre-EMI (equated monthly installment) interest on part-money disbursed on the housing loan taken by a flat buyer. In the changed economic context, the prospective flat buyers have turned cautious and are deferring their buying decisions, anticipating a drop in real estate prices. This has put the developers in a fix. In order to retain the buyer, especially during this period, the developers are now opting to dish out freebees such as payment of pre-EMI.

Be Careful, Time-based Payments Spell Higher Risks For Buyers

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:12:00 +0000

All those who are looking at buying property are now faced with a different kind of situation with regard to payments. Earlier, a buyer had to pay the builder a specific percentage of the total price as various stages of construction were completed. Many builders are now abandoning this mode of payment in favour of time-based payments. One should be aware of the working of this system, because it impacts their finances. In this form of payment, one pays the builder specific sums at certain pre-decided intervals. But it presents higher risk for buyers because they will need to make the necessary payment as per the schedule, but have little control over the construction of property. Due to this, there is a fair chance of delay creeping into the process. This is especially true if the builder gets into some kind of financial trouble and has to slow down construction activity. In such a situation, there is little that buyers can actually do because they have made the payment and can only wait for the delivery of the completed premises. So, this kind of payment should be efficiently monitored because of the higher risk element involved. If there are reputed parties at the other end of the transaction, there is some relief for buyers because they will not disappear with the money. However in other cases, buyers have to take necessary care and precaution before entering into such agreement. This would ensure that they are not chasing builders after sometime when the construction is not yet complete and they are yet to see the benefit of their investment.

Merrill Lynch Invests $ 2.65 Billion In Asian Market

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:08:00 +0000

Merrill Lynch has invested $2.65bn in the Asian Real Estate market. This is the third Asian property fund of over $2.5bn that has been raised this year, despite the continuing disturbance in the global banking market. It follows a $3bn fund raised by LaSalle Investment Management earlier this month and a $3.9bn fund raised by MGPA in June. Merrill Lynch is likely to invest across all property sectors, as well as in property companies and developers, many of which have found financing increasingly difficult to source. Having completed a first $140m equity raising for the fund in May, it is aiming to increase this to between $200m-$250m by the end of the year.

Parsvnath's Festive Sales Down By Half

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:04:00 +0000

Sales at Parsvnath Developers' in the festival season of Diwali are down to half from a year ago, but the company does not plan price cuts to boost sales, its chairman said. High interest rates on home loans and central bank rules forcing banks to assign a higher risk weight to real estate loans have dented property demand in India. Analysts say property prices are still high and need some correction before demand picks up. But Parsvnath has no such plans, Mr. Jain said, citing rising input costs. The company would instead focus on reducing costs by reducing salaries and firing 'non-performing staff,' and would speed up projects to improve cash flows, he added.

Global Crisis Affects Real Estate In Bangalore

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 10:01:00 +0000

The global meltdown seems to have hit the Indian realty business severely, especially in Bangalore. Uncertainty in the Indian equity market and speculation over property prices have put the developers in a depressing situation. More than 450 flats in Bangalore’s outskirts are still vacant despite advertisements and other promotion campaigns. Bangalore-based small developers are the worst hit, as their properties have not been sold in the past six months. The situation is pretty much same with many top line builders of the city, though many don’t want to express it in order to maintain their brand equity. The only hope for developers is the possible fall in interest rates on home loans, which has been assured by the Prime Minister and Finance Minister recently after the repo rate cut by the Reserve Bank of India (RBI). United Bank of India and Punjab National Bank have already decided to bring down the interest rates. However, other leading banks are yet to provide the good news to this effect.

Slowdown In Demand Forces Realtors To Freeze Rates

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:42:00 +0000

Real estate developers have hardly hiked their rates in the last six to eight months and some of them have not hiked them at all. Property analysts say this scenario is different from that witnessed between April and October 2007, when developers hiked rates by as much as 24% to 32%. According to a pan-India survey of local brokers in the residential property market, carried out by global research analysts Edelweiss, around 80% of brokers across India have witnessed a reduction in enquiries over the past month, and about 90% have seen a drop in transactions over the past month. A hundred brokers in 20 micro-markets like Bandra-Borivili, Mulund-Thane, Gurgaon, Noida, Whitefield-Marathalli and Annanagar, in Mumbai, Delhi, Bangalore and Chennai, were polled. Godrej Properties hiked rates for its Riverside project at Kalyan by 24% in 2007, but this year, it has increased them by a mere 7%, from Rs 2,000 per sq ft to Rs 3,000 per sq ft. Rates at Rustomjee's Elanza project in Malad (W) has remained constant, at Rs 9,000 per sq ft, after its hike of 20% at Rs 7,500 per sq ft last year. Similarly, property rates at RNA Builders' Royale Park and HDIL's Dreams project in Bhandup remained at Rs 6,500 per sq ft and Rs 5,750 per sq ft, after jumping 18% and 5% respectively from 2007.

Home Loans Likely To Get Cheaper

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:40:00 +0000

After shoring up the banking system with Rs 1, 45,000 crore funds, the Reserve Bank of India has paved the way for cheaper home, consumer, corporate and personal loan rates by reducing its key-short term lending rate (repo) by 100 basis points. The cut in repo would allow banks to immediately borrow short-term funds from the apex bank at a cheaper eight percent as against nine percent till now. Mr. Ashish Parthasarathy, Deputy Treasurer, HDFC Bank said, "It is a welcome step and clearly shows that the interest rate regime is now on a decent curve." Earlier, the RBI cut the mandatory cash deposits that banks must keep with it (CRR) by 250 points after five years, along with other measures.

Slowdown Affects The Demand For IT Space In India

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:37:00 +0000

Information technology space has resulted in reduced demand for office space in India in the second quarter of the current financial year. As per the report, many companies, especially in the IT/ITes sectors, have curtailed their expansion plans, which has hit office space sales in the last three-months. Another reason was the unavailability of funds for the sector, it says. The report also said that the current global conditions are likely to impact Mumbai the most as it is the financial capital of India, and the rentals and capital values across most micro-markets in the city will see a further correction. "The global economic slowdown has started to show early signs of impact on the office rental market. Going forward, this is expected to keep office rentals under check," said Mr. Anshuman Magazine, Managing Director, CB Richard Ellis, South Asia.

Realtors To Approach PM For Help

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:32:00 +0000

Following the footsteps of financial institutions and aviation companies, the real estate sector also plans to approach the government for a relief package. Realty industry bodies such as the National Real Estate Development Council (Naredco) and Confederation of Real Estate Developers Association of India (Credai) are all set to approach Prime Minister, Mr. Manmohan Singh with their wish-list next week. Mr. Rohtas Goel, Vice-President of Naredco, and Chairman and Managing Director of Delhi-based Omaxe Ltd, said, "Our main demand is that affordable housing should be withdrawn from section 80 IB (10) and moved to section 80 IA. The government has to make houses less than 1,500 sq ft in area tax-free. Even the stamp duty should be waived for affordable housing projects," Mr. Goel said. "Our second demand is that banks restructure the debt they give to builders and lower the rate of interest," he added. Credai, a real estate body that has 10 member associations from various states, has already dashed off a letter to the PM seeking a meeting. Mr. Lalit Kumar Jain, VP, Credai, said, "We want the government to instruct banks to take proactive measures to create liquidity in the market. We also want the government to do away with taxes it has imposed on developers for building residential properties." Mr. Jain said a developer pays 35% tax for the development of any residential project. Realtors want these taxes cut to zero.

Think Twice Before Buying A House, It Might Be Unfinished

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:24:00 +0000

Want to buy a new home this Diwali? Then don't go for a house that is unfinished, warn experts in the realty sector. The global financial crisis has left builders with little money and they are struggling to finish off even the half-finished projects, let alone going for new ones, according to industry analysts. Experts warn that the financial strain on realtors is causing indefinite delays in the completion of many projects. 'Those who intend to buy property should go for only completed flats. It'll be too risky to buy properties under construction," said an analyst with a foreign brokerage. He cited the example of a Mumbai-based realtor whose high-end residential project in Lower Parel, one of the city's commercial hubs, was to be completed in 2006 but has now been delayed till 2009. Uncertainty looms large over whether even this deadline will be met, he said. This isn't an isolated case. Analysts say delays of three to four years are likely in under-construction projects.

No Festivities For The Realty Market This Festival Season

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:09:00 +0000

Nothing seems to be going right for Delhi's realty market this festival season. Even discounts and freebies have failed to tide over sluggish sales. The global financial crisis has resulted in a severe credit squeeze, leaving aspiring home buyers with unaffordable rates on mortgages and expectations that property prices might fall significantly in the coming months. "Builders are offering big discounts but buyers are not relenting," said Mr. Suresh Dalal, a real estate agent. Free or subsidized clubhouse memberships, cars or other lifestyle accessories like air-conditioners, enhanced security features, reduction for waiver on premium of floor-rise, free car parking slots and complimentary school buses, are some of the other things being offered by builders. Still, buyers are determined to wait, most anticipating that prices will drop further.

Realty stocks bear the brunt of the fall

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 09:05:00 +0000

Shares of real estate firms were the worst hit on Friday after concerns of a liquidity crunch in the business drove the sectoral index, the Bombay Stock Exchange’s (BSE) realty index, down nearly one-fourth.
Shares of Unitech Ltd, India’s second largest developer by market value, fell by a record 51.29% to close at Rs30.10 each after intra-day trading took it down to an all-time low of Rs26.60.
Bangalore-based real estate developer Puravankara Projects Ltd, which saw its shares closing 44.32% lower, also touched a record low of Rs42.20 in day trade.
“People are concerned about cash provisions and where will real estate companies get money from,” said Sandeep Mathew, an analyst at BNP Paribas Securities in Mumbai.
An analyst with a domestic brokerage firm, who did not want his or his employer’s name to be used, said, “...people are exiting at any price because there are no buyers for realty stocks”.
There is an aversion towards real estate stocks among “investors (who) are now shifting from net asset value-based valuation to cash flows of the company”, he added.
Shares of DLF Ltd, the largest developer in the country, shed 23.96% to close at Rs203.90. Parsvnath Developers Ltd fell by 20.70% to close at Rs45.20.
BSE’s benchmark index, the Sensex, shrank 10.96% while BSE’s realty index, which consists of 14 real estate stocks, fell by 562.31 points or, 24.4%.
“Real estate stocks have been correcting mainly because developers have not reduced home prices despite a slowdown in sales,” said another analyst with a domestic brokerage firm. “In Unitech’s case, the stock has corrected because the company is heavily leveraged.”

Can investing in land assure good returns in future?

noreply@blogger.com (Realty Rider) — Wed, 29 Oct 2008 08:58:00 +0000

The lucrative long-term return on land plots may tempt you to buy, even at a time when the real estate sector is reeling under the impact of a slowdown. In such a market scenario, can investing in land still assure you of good returns in the future? What is the best way to invest in this precious asset and what are the crucial determinants to assess your prospective buy?

There are various ways to invest in land. Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) shares some key factors that are necessary to consider. “Identifying a piece of land that is in close or reasonable proximity to future market drivers is important.

Next, one should inquire into the legal status of the land and establish if it is for sale. Finally, locate the owners and make a purchase proposal. For maximum future returns, its is important to make one’s investment while entry costs are low,” says Anuj Puri, chairman and country head of JLLM.

One must especially keep in mind certain aspects to avoid any legal hassles later. For instance, land may be under litigation or may be earmarked for a government project. It could be categorised as forest land or could even be in a Coastal Regulation Zone.

It may also lack basic facilities such as water and power supply or fall in a politically or socially challenged sector. Any or a combination of these factors can subtract or nullify the investment potential of land. Hence all negative possibilities should be covered before purchase.

Another aspect which cannot be neglected is the paperwork needed. A number of documents are necessary in land purchase and need to be checked. The title deed (a legal document proving a person’s right to property), the encumbrance certificate (which proves that the land is not under some sort of legal dispute), the release certificate (in case the land was previously pledged to someone else), the surveyor’s report (to establish its exact dimensions) and — if the owner is an NRI — the power of attorney that gives his representative the legal right to act on the NRI’s behalf, are all significant documents that should be given careful consideration.

But is it profitable to invest in land in the current market situation? Some advise caution. “The current economic recession is leading to unprofitable business for everyone, whether it be a company or an investor. The downturn is obviously not the right time to invest in property as it is not going to reap any positive or profitable results. To make a profitable deal, the investor should wait for at least 2-4 years,” advises Vijay Jindal, CMD of SVP Builders India.

Akshaya Enters Fully Automated Housing Sector In Chennai

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:31:00 +0000

Property developer, Akshaya Homes announced its plans to foray into the fully automated housing sector with the construction of four flats, each of 3000 sq ft in Adyar in the heart of Chennai. These flats would cost Rs 4.5 crore each, said Mr. Chitty Babu, Chairman and Managing Director of Akshaya Homes. The flat would be equipped with a home sever box rpt box, which would make it digital, he added. Wifi connectivity, digital answering machines, small card based access to the home, main gate security and visitor tracking system, stand alone video surveillance, and tracking of events are some of the features. These features are being used for the first time in residential flats in Tamil Nadu, he said.

JMD Group To Come Up With Townships In Punjab And Haryana

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:28:00 +0000

Real estate developer, JMD Group, is planning to develop two township projects in Punjab and Haryana with an estimated investment of Rs 750 crore. The Group, which had floated a company JTPL Townships Private Limited for its real estate business, would develop luxurious housing projects in Mohali (Punjab) and Karnal (Haryana) over the next four years. "We will be investing Rs 450 crore on the Mohali project and Rs 300 crore in the Karnal project. Both these projects would be packed with international class amenities which will be within the reach of the common man," JTPL Townships, Director, Mr. Siddhant Gupta said. The first township project 'JTPL City Mohali' would be spread over 85 acres. Another township project in Karnal spread over 77 acres would be developed and the work on its development would start within next 4 months, he added.

Aryavrat Plans To Invest In Luxury Housing

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:25:00 +0000

Real estate firm, Aryavrat Housing Construction said that the company is planning to invest Rs 1, 000 crore in developing a 58-acres luxury housing complex in Bhopal. "In view of the growing need of fast developing Bhopal, we want to offer luxury and comfort with services that caters to all the day-to-day needs of an Indian family," Aryavrat Housing Construction (AHCPL) Director, Mr. Jagdish Arora said. The complex, British Park, would be developed for about Rs 1, 000 crore, which would comprise premium residential units, luxury bungalows, villas and mansions.

Realty Market Hit By Financial Crisis

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:20:00 +0000

India's fund starved real estate industry, which is already reeling under dropping sales, high interest rates and drying up of private equity sources, has to grapple now with credit squeeze created by this quarter. According to Mr. Anuj Puri, Chairman and Managing Director, Jones Lang LaSalle Meghraj, the RBI restriction on Indian banks from financing real estate companies is playing a role. As per industry sources, several realty majors have decided to go slow on their projects, especially in large cities, because of shortage of working capital, as banks have not only withdrawn overdraft facility but also decided not to process any more corporate loans.

Realtors Anticipating Some Relaxation In Home Loan Rates

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:18:00 +0000

While banks do not see any immediate decrease in lending rates after the 150 basis-point cut in Cash Reserve Ratio by the Reserve Bank of India, realtors anticipate the move to reduce home loan rates for their consumers. Demand for real estate property has decreased by nearly 25-30 percent in the country over the last 18 months, when home loan rates increased from an average of 7 percent to as high as 12-13 percent. "The home loan rate in India is among the highest in the world and we expect it to be reduced by at least 100 basis points after the cut in CRR," said Mr. Pradip Kumar Chopra, Chairman, PS Group. Mr Abhijit Das, Regional Executive Director, Jones Lang LaSalle Meghraj Meghraj said, "The recent move by RBI is expected to enhance liquidity to the primary and secondary real estate funding, while arresting further de-growth in real estate investments in the country."

L&T Mulls Real Estate Mutual Fund

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:13:00 +0000

Larsen & Tourbo (L&T), the country's largest engineering and construction conglomerate, is planning to establish a real estate mutual fund (REMF) to expand its portfolio of financial services to the construction industry, a top official said. The company might take a decision only after the financial markets stabilize. "We are considering expanding our financial support to the real estate sector. REMFs are an opportunity that we will pursue at an appropriate time," president (Operations), Mr. J P Nayak said. L&T also has a real-estate division implementing two large residential projects - one of those is in Bangalore.

Demand For Serviced Apartments Slows Down

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:10:00 +0000

Thanks to lower travel spends by enterprises, the serviced apartment players in major cities in India have seen a drop in occupancy rates. Even as global recession looms, companies are exploring cheaper alternatives such as owning apartments and resorting to video conferencing. Except for Delhi, all other major cities have seen a slide in demand for serviced apartments. Tariffs in these cities are expected to fall by 15%-20% in 4-5 years. The market in Delhi and Gurgaon has, however, managed to stay buoyant. Demand has perked up by 60-70% in the last one year and the upcoming Commonwealth Games (in 2010) are expected to drive up revenues in the medium term.

Builders Adopt A Cautious Approach Following The Slowdown

noreply@blogger.com (Realty Rider) — Thu, 23 Oct 2008 09:01:00 +0000

The slowdown in the real estate sector has forced developers in Mumbai to move cautiously. Several developers have cut down on work on their under-construction projects. Besides that, some developers have even postponed launch of new projects. To overcome such a situation, builders are just hoping and waiting for the real estate market to revive, said an insider. Currently, those developers that have large chunks of land for many years, and who have little exposure to banks, are in a comfortable position. The rest are finding the going tough while some who had purchased land at unrealistically high rates, are finding the noose tightening.

Residential Rentals Rise As Buyers Wait

noreply@blogger.com (Realty Rider) — Wed, 22 Oct 2008 08:20:00 +0000

The outlook for India's property market is turning gloomier and aspiring home buyers are hoping that they would get a good bargain if they wait. As a result, residential rentals are rising again. Renting a home is already costing 15 to 20 percent more than it did a year ago, according to Mr. Pankaj Renjhen, Managing Director at consulting firm, Jones Lang LaSalle Meghraj. "Buyers feel that property rates will come down and purchasing a flat will be a more feasible option in the coming months." The US financial crisis, which saw some Wall Street icons collapse, has already begun to affect India's real estate market, which was betting big on foreign money to sustain its high ride. As per housing experts, foreign institutional investors pumped about $4 billion (Rs 19, 200 crore) into India's real estate market in the past three years. The inflows have considerably slowed in recent months and some fear these might completely dry up, given the squeeze in the global credit market. The absence of liquidity has made it difficult to hold the price for long. With the supply falling short of demand, rentals will continue to rise until property prices fall to what buyers would see as affordable.