Indian Real Estate-News and Information

Retail joint venture between DLF & Piquadro dematerialized

2009-07-08T13:02:00.000+05:30

DLF Brands is winding up its joint venture with Italian leather and luggage accessories major Piquadro to open a chain of monobrand stores in the country. The development comes even as real estate giant DLF’s retail management arm is resetting growth strategies following an economic downturn, and reviewing the expansion plans of a few international fashion and lifestyle brands it operates locally.
The 51:49 JV between Piquadro and DLF Brands was projected to open 16 exclusive stores by 2013. DLF has closed down the first high-end Piquadro store opened in New Delhi almost six months back and has dismantled an internal team working on the brand.
Timmy Sarna, CEO of DLF Brands, confirmed the closure of the existing Piquadro store. “Piquadro is a very sophisticated brand, which is much ahead of its time with regard to the Indian market. It had a higher price positioning than our other brands and was unable to garner enough brand recall,” he said, when contacted.
However, he added that DLF may revisit plans and introduce Piquadro with more stores in the next few years once the market is ready. Mr Sarna also denied that DLF was putting expansion plans on hold or reviewing the business strategy of a few other international partnerships with Italian apparel brand Alcott and French home decor retailer SIA. He added that the company was poised to open 15 odd new stores in the next few weeks across its brand portfolio. It operates a network of 20 stores currently.
DLF Brands had signed up a host of global brands in the premium-to-luxury segments over the last two years. This included high-profile JVs with Giorgio Armani, Salvatore Ferragamo and Dolce & Gabbana. Besides, it had also roped in brands like Alcott, Boggi, SIA, Sunglass Hut among others either through licensing deals or joint ventures.
This large portfolio had niche global brands with not-so-high brand recall in India. Sectoral observers said DLF Brands could be reworking its retail play and expansion plans of several brands in the wake of the changed economic climate. But its JVs with Giorgio Armani and Ferragamo were on firm ground even though fresh store openings are likely to be deferred in the prevailing conditions.

Merger between State Bank of India and State Bank of Indore

2009-07-08T12:58:00.000+05:30

The State Bank of India (SBI) board has approved the merger of its subsidiary, the State Bank of Indore, with itself. This would be the second acquisition by SBI of a subsidiary bank after the merger of State Bank of Saurashtra. The State Bank of Indore board, too, has approved the merger proposal. SBI holds 98.3% in the bank, and the balance 1.77% is owned by individuals, who held the shares prior to its takeover by the government.
The acquisition of State Bank of Indore will help SBI add 470 branches to its existing network of 11,448. Also, following the acquisition, SBI’s total assets will inch very close to the Rs 10-lakh crore mark. Total assets of SBI and the State Bank of Indore stood at Rs 998,119 crore as on March 2009.
The country’s largest lender had in early 2007 announced its intention to merge all its seven associate banks with itself. The market had estimated that SBI would first merge the small unlisted banks. SBI holds 100% stake in State Bank of Hyderabad and State Bank of Patiala, and in the range of 75-98% in State Bank of Bikaner and Jaipur, State Bank of Indore, State Bank of Travancore and State Bank of Mysore.
For SBI, the acquisition of State Bank of Indore will mainly be an HR exercise. This is primarily because SBI and all its six associate banks share a common IT platform and follow similar policies. Further, even as treasuries of all the associate banks operate separately, they are situated in the same building in south Mumbai. Moreover, the associate banks already sell insurance policies of SBI Life and issue SBI credit cards.
“The timing of the approval indicates there is some level of comfort for SBI to go ahead with the plan of merging its associate with itself, given that the Left is out of the picture,” said Hemindra Hazari, head of equity research at Karvy Securities.
It may be recalled that the SBI board had approved the merger of State Bank of Saurashtra with itself sometime in August 2007, but could only complete the process by August 2008, after the Left had walked out due to differences over the Indo-US nuclear deal. In his first meeting with the CEOs of PSU banks, finance minister Pranab Mukherjee said consolidation was important to improve competitiveness among Indian banks.

US ANTI-TRUST NOD has been granted to Tech Mahindra for Satyam Open Offer

2009-07-08T12:55:00.000+05:30

As per TECH Mahindra news, they have got the approval from the US anti-trust authority regarding its Rs 1,154-crore open offer for the purchase of an additional 20% stake in Satyam Computer.
In a filing to the stock exchanges Tech Mahindra said, “Our request for early termination of the applicable waiting period relating to the offer has been granted under the Hart-Scott-Rodino Antitrust Improvements Act of 1976...”
Tech Mahindra further said, “The condition to the offer with respect to anti-trust approval under the Hart-Scott-Rodino Act has been satisfied.” The anti-trust approval in the US was needed as both the companies — Satyam and Tech Mahindra — have technology outsourcing work in the United States, and also because Satyam is listed on the NYSE.
The open offer has already got anti-trust approval from Germany’s competition regulator, the Federal Cartel Office, and India’s two premier bourses Bombay Stock Exchange and National Stock Exchange. Tech Mahindra had announced an open offer on April 22 for buying an additional 20% at a price of Rs 58 a share.

IVRCL INFRASTRUCTURES & PROJECTS on the move of getting the orders from IOCL & other vendors worth Rs 432.36 CR

2009-07-08T12:53:00.000+05:30

As per information published by IVRCL Infrastructures & Projects, they have bagged contracts worth Rs 432.36 crore from different vendors, including Indian Oil Corporation, for construction-related works. The company has received an order worth Rs 144.56 crore from Coastal Gujarat Power. The project is scheduled to be completed in 18 months and two orders aggregating Rs 81 crore from Uttar Pradesh Rajkiya Nirman Nigam, IVRCL said. The infrastructure firm has also received a Rs 46.54-crore order from IOC for construction of quarters, estate office at Paradip and a Rs 21.51-crore order from Hindustan Dorr-Oliver.

Lending rates for home loan customer has been reduced by SBI for first 3years

2009-07-08T12:44:00.000+05:30

STATE Bank of India has launched two special home loan schemes that assure low interest rates in the first three years, upping the ante for its rivals in the mortgage market, which has turned bullish following a pickup in home sales in May.
HDFC is yet to take any action in this matter as the budget has already been passed in parliament. ICICI Bank said it has already reduced interest rates in line with the movement of systemic rates and deposit costs. “We believe that the home loan segment has robust potential and we would continue to focus on this segment,” said an ICICI Bank spokesperson. LIC Housing Finance—the second-largest mortgage finance company—has also reduced home loans for existing borrowers by 50 basis points.
The intensity of the competition between SBI and HDFC is evident from claims and counter-claims from both sides on the superiority of their product. “Even if the borrower gets a better deal for the first three years, his payment over the remaining tenure of the loan will be lower under an HDFC loan,” said HDFC joint MD Renu Karnad. The institution’s chairman, Deepak Parekh, had recently announced a possibility of lending rates coming down if there is a decline in cost of funds.
According to Ms Karnad, there has been a remarkable pickup in home sales. “We are seeing this because of a real reduction in property prices. Builders like Unitech and Lodha have brought down rates in Delhi and Mumbai and are seeing growth in sales.” She added that the pickup in sales was so sturdy that prices have started picking up again—a perception echoed by SBI. “There is a definite pickup in home purchases partly driven by a fall in cost of loans and real fall in property prices. There are pockets where the resurgence is so good that property prices have started picking up; it has come a full circle quickly,” said an SBI official. SBI has a home loan portfolio of over Rs 56,000 crore.

Homosexuality legalized by Delhi High Court

2009-07-08T12:33:00.000+05:30

In recent order passed by Delhi High court, Section 377 of the Indian Penal Code (IPC) has been striked down and legalized homosexuality.
Section 377, a law from the British Raj era, says homosexuality and unnatural sex is a criminal act.
Hearing a petition of Naz foundation, a bench comprising Chief Justice Ajit Prakash Shah and Justice S Muralidhar said if not amended, Section 377 of the IPC would violate Article 21 of the Indian constitution, which states that every citizen has equal opportunity of life and is equal before the law.
The bench said it was not illegal for woman and woman or man and man to have private consensual sex. The bench ordered that the Section 377 was violative of Article 21 of the Indian constitution.
The order assumes significance in view of the Home Ministry and the Health Ministry conflicting each other’s stands. While the Home Ministry wanted the petition to be dismissed, the Health Ministry said the statute 377 was obstructing AIDS/HIV prevention efforts.
AS An NGO working among AIDS/HIV-affected people, all that the petitioner sought was a reading down of the wide-ranging provision, which imposes life sentence on those found to have carnal intercourse against the order of nature. Much as the provision sounds archaic, there is little likelihood of it being repealed as the relief sought by the petitioner, by its own admission, has been framed to ensure the continuance of applicability of Section 377 to cases involving children or cases involving non-consensual sex. However, the Yoga Guru Baba Ramdev & a leading psychiatrist is against of the same as the homosexuality will be against of the nature.

Disaaproving of Immovable property sale through General Power of Attorney or Will by Supreme Court of India

2009-07-08T12:30:00.001+05:30

Strongly disapproving of the sale of immovable properties through general power of attorney (GPA), agreement to sell and will, the Supreme Court has declared that such sales of property are not only illegal, but also cause huge loss of revenue to the state exchequer, besides encouraging the real estate mafia and their musclemen to indulge in fraudulent sale of properties to more than one purchaser.
A bench comprising Justices R V Raveendran and J M Panchal also issued notices to the Union government and the states of Punjab, Haryana, Delhi, Uttar Pradesh and Maharashtra seeking details of the steps taken or proposed to be taken by the respective states to deal with the chaotic situation arising from such transactions.
The apex court, while directing the matter to be listed for hearing in the last week of August, has also directed the states to inform the court whether power of attorney sales (that is, transactions involving execution of sales agreement/GPA/will) instead of regular sales are prevalent in their respective states and sought the views of the respective state governments in respect of such transactions.
Justice Raveendran, writing a 13-page judgment for the bench noted, "whatever be the intention, the consequences are disturbing and far-reaching, adversely affecting the economy, civil society and law and order.
Firstly, it enables large-scale evasion of income tax, wealth tax, stamp duty, and registration fees, thereby denying the benefit of such revenue to the government and the public.
Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/ income, thereby encouraging circulation of wealth, and corruption.
This kind of transaction has disastrous collateral effects also. For example, when the market value increases, many vendors (who effected power of attorney sales without registration) are tempted to re-sale the property taking advantage of the fact that there is no registered instrument or record in any public office, thereby cheating the purchaser.
When the purchaser under such power of attorney sales comes to know about the vendor section, he invariably tries to take the help of musclemen to sort out the issue and protect his rights.
On the other hand, real estate mafia many-a-times purchase properties which are already subject to power of attorney sales and then threaten the previous power of attorney sales purchasers from asserting their rights.
Either way, such power of attorney sales indirectly leads to growth of real estate mafia and criminalization of real estate transactions." Overall, we can see this step in favour of buyers who always been feel cheated during these kind of immovable property transactions.

Delhi budget & hopes for delhites

2009-06-30T17:16:00.001+05:30

The good news for delhites has been come up in this budget. To push the completion of all Commonwealth Games related projects in the capital, Delhi government allocated Rs 2,105 crore for the financial year 2009-2010. Presenting the budget, Delhi finance minister Dr AK Walia said that this will include Rs 1,000 crore additional Central assistance from the Union government.
As per Delhi Chief Minister Sheila Dikshit, her government is not facing any dearth of funds to execute the projects. Walia said that by the end of this year Rs 4,657 crore would have been spent on these projects and so far the central contribution has been Rs 1,750 crore. The total expenditure could touch approximately Rs 6,728 crore.
Earlier in the day, while presenting the budget, Walia claimed that the timely completion would not only contribute to the “successful organization” of the Games but would also “add assets” to the city. He said that the government has appointed consultants to suggest and design the landscapes around the Games venues and also intersections on all major roads connecting the venues. He added that a polyclinic will be set up at the Games Village by the health department in addition to setting up of a medical facility at each venue and training centre.The redevelopment works in heart of Delhi- Connaught Place area whereby the structures were very old and was in need for cares were already started under JNNURM project with a total investment of Rs 253 crores. Delhi government had released the first installment of Rs 22 crore last year and for the current fiscal, an outlay of Rs 45 crore has been proposed.
In his please-all budget, Walia also allocated Rs 1,524 crore for urban development, the second highest plan allocation after the transport sector. Central government has approved 15 projects for construction of about 65,000 flats worth Rs 1,815 crore as part of Rajiv Rattan Awas Yojna, under JNNURM. He said that about 8,000 flats are ready for allotment.

DLF raising funds from Stanchart Bank

2009-06-30T17:12:00.001+05:30

As per industry sources, India's largest real estate firm DLF is close to raising $300 million by way of a foreign currency loan at a rate significantly lower than what it would have to pay in the domestic market. The company is raising the loan from Standard Chartered Bank at an interest rate of around 7%, as against its current average borrowing cost of 12.5% in the domestic market.
The 7-year loan is being raised at a rate of Libor plus 500 bps. The loan will be used for one of the integrated township projects of DLF. The realty firm is developing around half-a-dozen townships, but it could not be immediately ascertained which project this fund will be deployed.
However, the entire gamut is not confirmed till now as none of the news has been come up. The loan will be through the External Commercial Borrowings (ECB) route. Current central bank rules permit such overseas loans to be raised only for integrated township projects. The Reserve Bank of India (RBI) had permitted real estate companies to raise funds through the ECB window for integrated townships late last year to boost activity in the housing sector in the light of a serious liquidity crunch at home.
But the seizure in the international credit market in the aftermath of the collapse of US investment bank Lehman Brothers last September meant overseas markets were not available for fund raising.DLF, which had net debt of Rs14,000 crore at the end of March, has been raising long-term loans in the domestic market to replace shorter duration debt. Since December last year, it has raised at least Rs3,000 crore of long-term debt from a clutch of state-run banks and insurance major LIC at an average borrowing cost of 14%.

Lodhi Era Arch is misused by locals at Delhi

2009-06-30T17:10:00.001+05:30

The Municipal Corporation of Delhi (MCD) has halted construction around the Lodhi era structures in Mehrauli, where some locals were building an unauthorized structure. Due to these new under-construction structures, historic arch with unique calligraphy work is being misused by the locals.
As per archeologist & historians, the arch was originally part of a tomb or gumbad which was partially demolished in early 1993. Only parts of the original monument managed to survive, including the arch with extensive calligraphy work of the era in which it was built. The ruins and arch are listed heritage structures according to INTACH Delhi Chapter and also feature prominently in MCDs heritage list.
Locals had started building a structure at the site where the ruins of the monument are, in Andheria More in Mehrauli. The arch is being used as part of the new structure. Already a side wall was built and the work was in so speed that the whole structure can be built within few days. The construction has already come to the notice of the state department of archaeology, which is currently working on the restoration of 92 monuments in the city not under the jurisdiction of Archaeological Survey of India (ASI). The unauthorized construction at the historical site cannot be allowed to continue under any circumstances.
Historians and conservationists fumed that this was a major violation of a historical monument. The arch was the only portion of the structure which was still intact after the building was first demolished and the remaining portions collapsed over the years. At a time when the government is working towards notifying unprotected heritage structures, it is appalling that such an illegal building is coming up on the main road of Mehrauli, said a conservationist.
As the heritage list was pending notification with Delhi government for the last five years, the action taken for the unauthorized construction would be limited at MCD end.

Short of fund with indian real estate developers

2009-06-29T12:54:00.001+05:30

Several private equity (PE) players, global and domestic, whose lock-in period in real estate investments are to end soon, are pressurising developers for an exit route. While some PE players are asking developers to go for an IPO at an SPV or a portfolio level, developers who are wary about going public are approaching other investors or even buying back stakes themselves.
Biren Parekh, Partner, (Real Estate), Ernst & Young, said, “Some developers delayed projects to get higher valuations in the booming market. Many PE players, especially at an SPV level, now want to exit and are asking developers for an exit route.” A fund manager with a US-based PE fund agreed, “While some developers delayed projects, time has been running out for us. Some clauses that formed the agreement allow us to persuade developers and ask them to give the returns agreed upon.”
India’s real estate sector witnessed fund inflows of more than $16.5 billion from PE players since 2007. While 2007 witnessed 86 real estate deals, this number stood at 78 in 2008 and just six this year. Kaustuv Roy, executive director, Cushman & Wakefield, said, “Some developers are negotiating with PE players as the former are wary of going public. The IPO would be a big risk. But PE players have their limitations and thus one may see some activity in the sector soon.”
A number of PE players are driving a lot of strategic and operational initiatives within their investee companies. They are reworking debt, relooking at marketing strategies and day-to-day management,” said industry tracker Anckur Srivastava.

New Projects launched in Delhi NCR

2009-04-29T13:06:00.002+05:30

Latest development in real estate market has arrived in Delhi NCR.

DLF limited, india's largest real estate player has launched DLF Capital greens at Shivaji marg Delhi at a very low prices of Rs 4500 per sft. It has various type of apartments belonging from 1200 to 1600 sft approx super built-up areas in 2, 3 & 4BHK accommodation.

Unitech has launched his projec at Sohna Road Gurgaon under the name of Unitech Uniworld City Phase-II at a BSP of Rs 2,990 per sft.

The dream home bargain

2009-03-19T10:46:00.002+05:30

Are you a person who always looks for the steal deal? Someone who judiciously budgets your expenses to get the best bet out of everything life can offer you? Well, then you probably must be putting in a lot of research on where you shop, when you shop and how you shop for it. Right from the precious antique furniture piece to the lovely second hand, still in mint condition Fiat you own, everything has been bought with a great deal of thought, calculations, research and background check.

Now you have decided to opt for your own house. As usual your mind is ticking about how to make this one the steal deal of a lifetime. Well, we got news for you.
Have you ever considered a home auction that is periodically conducted by several banks? You actually can get a house which is lesser by nearly 20% of the current market value. Let us help you get started on some research for you to build the plan for your steal.

Topics

How does it work
Why it could be a steal
The market for auctioned properties
The emotional side of it
How does it work

The SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54) of 2002), empowers the banks and financial institutions with the right to recover the mortgaged property in case of loan defaults, without the intervention of the court. This means the lenders can take immediate action and bring into effect the take over of the property in question quickly. Though it seems to be at the expense of the home loan defaulter, who is not examined keenly for reasons behind the defaults, nevertheless it appears to be a good opportunity for people to buy a property for a very reasonable amount of money.

Why it could be a steal

Once the lender takes control of the property, an independent valuation is conducted with the help of an independent chartered surveyor who fixes two values for the property. One is the market value of what the property is actually worth and another is termed as the distress value, which is around 15-20% lower than the market value. Due to the circumstances under which the auction is conducted, the property is almost always quoted with the distress value for the minimum bidding price at the auction. At the auction of course the prices can go up according to the bids and the location of the property. This gives the prospective new buyer an opportunity to win an auction for a very good deal as opposed to buying a property at the existing market value.

The market for auctioned properties

It is still a very unorganized market, which is just beginning to open up as a venue for a prospective home buyer. More often than not it is currently more possibly a property investor's market rather than an end user market. Also, the proportion of commercial properties auctioned could be much higher compared to the residential properties auctioned.

Listed below are some pointers to guide you on the process and background check:

A. Scrutinize property sections of newspapers

Many nationalized banks periodically advertise in the popular dailies regarding auction dates, venue and the location of properties to be put up for sale.

B. E-auction is also an option

Some banks do announce it by the way of e-auctions, as it is a faster, more transparent medium to choose the highest bidder. It reaches out to a more wider target audience and it helps the banks sell these properties at an effective price, which will help them recover the costs incurred through the loan more efficiently.

C. Secure legal aspects

As a prospective bidder you will be allowed to check the property you are planning to bid beforehand, once a caution fee has been collected from you for participating in the auction. Do make arrangements for a legal counsel to accompany you for this visit and help you with all the legal aspects of the transaction. Though you are making a business transaction with the banks, which by itself means you will receive a legally safe and registered property, you still need to do your share of the homework.

With the help of your legal counsel, investigate the title of the documents and do your research with the registry for a track record of the past 30 years of the property to understand who were its past owners, how many hands it changed and whether there was any legal tangle in the past that needs to sorted out before your make your winning bid. Verify all municipal records, tax records, whether the current owner has sole ownership and if it can be transfered to you in accordance with the rules specified in the Transfer of Property Act.

D. Be prepared for additional costs

The properties auctioned are disposed in the state they were first taken over by the banks. Hence, there might be some costs like outstanding payments due in terms of house tax, electricity, repairs, renovation etc. that need to be incurred once you purchase the property. Factor in all these aspects when you make the bid.

The emotional side of it

When one looks at it from the perspective of an auction for the homes of defaulters, one does feel a wave of emotion about the unconventional route to buy a home. One may wonder about the loss of one becoming the gain of another. However, you need to treat it as nothing more than a sale transaction because you do not have to be affected over somebody else's mismanagement of finances. Moreover, not all houses are given up for auction by home owners unable to pay the loan, it could be a situation where the individual giving up the house to the bank considers it as a fixed asset that could be liquidated in an hour of need. The excess funds from selling the house if any, would go to the previous house owner, who gave it up to the bank. Moreover, all sale transactions happen through the bank, so you need not have worries over the technical aspects of the sale. However you need to get your routine checks in place to see that you derive the benefits that ideally accompany such a steal deal.

Source- Bank Bazaar

Indian real estate hope to come back on track after FM assurance for cheaper loans

2008-11-14T16:18:00.000+05:30

Today Indian Finance minister P Chidambaram assured real estate developers that government will impress upon banks to accelerate lending to realty, which is facing one of the worst slowdown in the recent times. The step is a result of meeting held with FM and the delegation of builders under the Confederation of Real Estate developers' Association of India (Credai), to complain against banks' reluctance to disburse loans to the real estate companies.
As per FM P Chidambaram, government will not only help the Indian real estate sector in terms of providing liquidity but will also work to reduce the present lending interest rates.
Due to rise in interest rates which has been increased from 8% to approx 12%, the Indian real estate sector has affected very much and it was facing a adverse demand crunch. As per RBI & government, the rise in interest rates were the effect of speeding realty rates which has creates a bubble thinking between lenders & investors. To keep the better control, RBI has increased the interest rates, tightened the provisioning norms and made loans costlier & tougher to real estate sector.
As a result in hike of interest rates, EMI and tenure of loans has increased which in turns reduce the demand of real estate. At present as the global economy has weakened, the Indian FM has assured the sector player that government will relook the norms and will increase the liquidity in real estate sector as well as will bring down the interest rates on lending.

The other relevant details can be grasped from Times of India, Financial Express, Indian Parliament news etc.

Real estate industry facing the credit crunch & liquidity

2008-10-24T13:42:00.000+05:30

By now, everyone knows that the financial crisis in the United States has hurt the sentiments of the global economy. Some economies have been affected deeply, while others are managing to cope with its effects. The real estate sector has been suffering from the affects of the liquidity crunch that is being faced by most of the industries in India. The realty industry had already been reeling under dropping sales, high interest rates and the drying up of private equity sources when it came face to face with the credit crunch.

Many of the developers seem to be in troubled waters, some to the extent of delaying the launch of their projects. But some of the major players are simply trying to make the most of the situation by completing their pending projects in order to deliver the product in the stipulated time period to their customers and keeping them happy even in times of trouble.

The more habitation takes place, the sales of the project will only increase and thirdly, this will bring in the required money for the developers, which they are all in need of. As far as launching new projects is concerned, most of the developers are not launching their projects at present. The developer who will complete the project on time will have the upper hand in terms of customer loyalty. The pinch and crunch in the market has definitely insulated in the industry and delayed the launching of many projects.

In current industry, the most effect is on the builders who has expanded and acquired many land banks & projects. While the major developers are probably not ready to admit the deep waters they are in, Anshuman Magazine, Managing Director of CBRE says, "Right now, surprisingly, projects are still being announced, but in the larger context developers would certainly think before launching anything in this kind of a market. Several would have postponed but, yet we are seeing launches even in so much gloom and doom across the country." The fact is that today developers are launching their projects with the expectation that they will not get the same as they used to get a year back. Because till then it was possible that in two days developers managed to sell 20s-30 % of the project. But today projects are being launched with an expectation of selling the projects within the next two-three years.

Delivery of the residential project depends on important factors such as scale of the project, location, reach and financial position of the developer. The real estate sector has been severely hit by the domestic credit squeeze and the global financial crisis. Due to diminishing sales and liquidity crunch, developers are under constant pressure. Developers might either slow down the construction or reduce property prices to catalyse demand.

Developers started to offer discounts on homes in range of 10% and above

2008-10-24T13:41:00.000+05:30

With the worldwide financial crisis playing havoc in the US and European markets, India too is keeping its fingers crossed. Tremors are being felt everywhere - from the stock markets to the rupee exchange rate, and from the spiralling inflation to homeloan interest rates. People don't seem to have any idea, especially on the eve of a most important festive season. This festive season, owing to the market meltdown, property developers are offering a lot to by way of special discount bonanzas, which include free covered parking space or exemptions from preferential location charges even free cars.

Looking at the market mood, developers have resorted to more innovative ways. For example, discounts are given on the rate per sq ft of the property, reducing its cost. Main discount offers have come up for corporate employees where the developer has their tie-ups. Recent example for the same is SVP group who has started to offer Rs 40 per sqft discount or 10% discount in booking amounts. The other offerings by the SVP group are 50GM gold coins, Holiday EMIs, No EMI till possession etc.

Payment of stamp duty and registration fee: Depending on the state in which the property is being registered, stamp duty and registration fee account for 4-10 % of its cost. A sop has been built around these expenses as well. Some developers bear the registration cost either partly or fully. Some developers subsidize a certain per cent of their customer's electricity bills for some years.

Though the property boom is cooling off in select pockets and builders are offering all kinds of freebies to hook customers, the prospective buyers must be careful about these baits. Freebie discounts can amount to a net worth of 5-10 % in Tier-I cities like Mumbai and Delhi. These tacts are being used as a marketing tool mostly by developers in Delhi, Mumbai and Chandigarh. The trend is likely to continue till the interest rates come down to a moderate level and capital values cool off. But, do we feel that these discounts will actually benefit to us in terms of money paid for homes.

The biggest challenge today is the interest rate on home loans. It has gone up from 7.5% to more than 12% and this has obviously shocked the homebuyers whose budgets have gone haywire. As a result, the buyers are going in for smaller tenements or waiting for interest rates to fall.

In current scenario many developers and industry experts feel that this might be the best time to invest in the real estate but do we feel that it will so? Before one year, we all know that real estate was booming and the rates are on their peak but in present these are going marginally down. In point the recent changes many investors are waiting for correction in market. Till the time we can say that the recent crunch has given a good opportunity to exisiting buyers in terms of cash discounts, freebies, free cars, free car parking, No PLC, No EMI till possession etc.

Indian Property Investors are forced to sell in loss by global downturn.

2008-10-23T15:42:00.000+05:30

Young property investors in India are selling at a loss because they can no longer afford to pay the interest and costs associated with owning multiple properties.
The global downturn has set off a panic reaction, inducing investors to close deals at losses. It has become almost impossible for those who invested in real estate last year to exit the scene as the downturn has deepened and the prices being quoted do not even cover the purchase costs and interest expenses.
Typical is 35-year-old Rahul Verma, who works with a Noida-based IT company. He bought a flat in Greater Noida early last year purely as an investment with a bank loan to finance 85% of the cost.
Since then his EMIs have continuously gone up thanks to a series of rate hikes by the RBI. However, the prices haven't climbed as expected and the outgoings have made the property expensive. Rahul is now left with the only option of selling at a loss. And given the global economic gloom, he is willing to take a hit.
'Several investors are stuck simply because there hasn't been enough price appreciation in the past one year,' said Raheja Developers Chairman of Navin Raheja.
He said that young investors bought at the peak of the property cycle last year. Many purchased two apartments simultaneously, assuming that they would finance one by selling off the other at a premium. They are now caught in a difficult situation as they bought at a higher market rate and are compelled to service two EMIs.
Some investors have started defaulting. Others are approaching developers to cancel their bookings and return the money.
Meanwhile developers are finding it hard to finance projects and banks have started taking proactive measures to prevent defaults in their real estate portfolio by cutting exposure to loans against property.
State lender Punjab National Bank (PNB) has taken a lead and has stopped giving such loans, while Bank of India, Bank of Baroda and Indian Overseas Bank have decided to go slow on such loans.
'We are discouraging loan against property by refusing to provide overdraft facilities and charging higher margins,' said a spokesman for Bank of India. Other banks are discouraging such loans by valuing the property at distress level or by valuing the property at the price it was purchased.
The recent changes in Indian economy have made a tough task to the individual young & salaried investors in a derth. However, the RBI action of reducing Repo rate and interest rates of Home loans might give some help in terms of EMI to the investors.

Downfall in Indian realty firms

2008-10-23T15:37:00.000+05:30

Future economic historians may remember the month that just ended as Black September. Lehman Brothers collapsed; the Bank of America acquired Merrill Lynch; AIG was nationalised; banks such as Washington Mutual and Wachovia were wiped out. As credit and finance markets around the world tumbled like ninepins, so did stock markets in India, with the Bombay Stock Exchange Sensitive Index (Sensex) falling 3.35% or 469 points on September 15. The worst affected was the realty index which dropped 7.6% on the same day. Since then, while stocks prices in India have seen massive swings, shares of real estate firms have remained depressed, falling a total of 20% as of October 1. Nifty has dropped at the point of 2960 on October 23rd.
In addition to housing stocks, home prices are taking a beating. By some estimates, prices have dropped by 25% in certain urban markets. While in the US - and also in Britain - the subprime mortgage mess has seen home prices fall dramatically, in India, such slowdowns have been rare - at least in the past. Prices may soften, sales activity may slow and occasionally a distress sale occurs, but there has not been an overall fall in home prices. "India has not seen a boom-bust cycle in real estate mainly because the industry is still nascent," says Anurag Mathur, joint managing director of Cushman & Wakefield, a global real estate solutions company. "India has not seen a boom and bust cycle in almost any sector," adds Rajesh Chakrabarti, a professor of finance at the Hyderabad-based Indian School of Business (ISB). "While there have been variations, we have not had cycles of the kind we see in the developed countries. It is only after liberalisation that the Indian economy has been seeing more cyclical movements."
According to Irfan Razack, chairman and managing director of the Prestige Group, a Bangalore-based real estate developer: "We have boom and bust cycles in India but because of our huge population, the demand keeps growing and that sustains the industry. You can build for the next 100 years and there will still be demand for housing in this country."
India has inadequate data on the real estate sector. For instance, no one tracks housing starts, an indicator that is regarded in many countries as an important yardstick of economic health. However, several real estate companies have gone public during the past couple of years, which makes information more transparent. Secondly, equity analysts have begun tracking these companies and the real estate industry.
Still, confusion continues. Consider the reaction of the markets to the Lehman collapse. Real estate was hit for two reasons. Lehman had invested $200 million in DLF Assets, a company belonging to DLF, India's largest real estate company. It had also acquired a 50% stake in Unitech's Mumbai project for $175 million. (Unitech is India's second largest real estate company.) Among other Lehman investments or proposed investments were those in the Mumbai-based Peninsula Land Ltd. and Housing Development & Infrastructure Ltd. (HDIL).
Overall we can analyze that the recent changes in fiancial scenario have made a drastic impact on glaobal economy as well as Indian real estate sector.

City Briefs- Delhi

2008-10-23T15:31:00.002+05:30

Delhi is rapidly moving towards being a world city. At the heart of the National Capital Region lies the National Capital Territory of Delhi (NCTD). It covers an area of 1483 sq. km approx, comprising just 4.41% of NCR and 37.22% of its population.
The Delhi Metropolitan Area has been redefined comprising the NCTD, Ghaziabad-Loni Complex, Noida and Greater Noida-controlled area of Uttar Pradesh, Faridabad-Ballabgarh Complex, Gurgaon, Bahadurgarh Kundli and the extensions of the Delhi Ridge in Haryana.
Delhi is a mix of planned and unplanned development. Lutyens' Delhi and Chankyapuri with its majestic Embassy, school and office buildings stand in contrast to the commercial areas of Janpath which have grown unchecked. On the other hand, heritage structures of the Mughal era lend a quaint charm that is quintessentially "Delhi".
The Delhi resident enjoys privileges that no other city can provide - be they educational, cultural, medical, or shopping, food and entertainment, all of which are the best that the country can offer. Being 'primus inter pares' amongst cities in India, Delhites are privy to all the firsts that are launched in India.
Delhi boasts of a per capita income that is two and a half times higher than the national average. The affluence is reflected in the high spending power and extravagant lifestyle Delhi is famous for. The city with the largest number of automobiles on the road has also won the US Department of Energy's first 'Clean Cities International Partner of the Year' award for ''bold efforts to curb air pollution and support alternative fuel initiatives'' achieved by enforcing CNG-run public transport.

Infrastructure and Facilities

The process of planned development for Delhi was envisaged as a public sector led process with very little private participation. The Master Plan 2021 deviates from its predecessors to cater to a population of 23 million by 2021. Vision 2021, integral to the Master Plan for Delhi aims to create a world-class city through a purposeful transformation of the existing civic infrastructure.
The deviation will see a critical reform in the prevailing land policy and in following the public - private partnership model for redevelopment of existing colonies, and opening up of an additional 25 to 30,000 hectares of land that will be required to provide for the 23 million citizens of the city by 2021.
The MRTS Network operates three lines with a total length of 65 km and 59 stations and will eventually cover 244.9 km. By 2017, 30% of the NCTD will be within a 15 minute walking distance from the proposed Metro stations.
The Greater NCTD has opened up to the mixed use of available land to meet the growing commercial needs - 2183 streets have already been notified for local commercial and mixed use activities, and shops catering to daily needs have been allowed on the ground floor of residential buildings.
Meanwhile, as part of its makeover plans for Delhi, the Planning Commission has sanctioned Rs. 2,270 crore in 2007 for its transportation network. This was just 40% of the city's budget of Rs. 5200 crore. By the year 2010, more hotels, a multi-modal transport system and a world-class airport, nine museums, open air theatres, light and sound shows, vastly improved civic services, convention centres at Pragati Maidan, Yamuna diversity Park of 457 acres, a metro link to the Nehru Stadium and 38 high capacity bus corridors will be ready
On the National Highway connecting the city to Gurgaon, flyovers and underpasses are being planned at Station Road and Palam Road-Parade Road junction, making the international airport more accessible. An underpass at Rao Tula Ram is also under consideration to reduce congestion between Moti Bagh and Signal Vihar. Some of developer’s residential projects in Delhi are Parsvnath La Tropicana, Indiabulls Castle woods, Emaar MGF Common Wealth Games Village, M2K Victoria Garden etc.

Disclaimer- Figures mentioned in above paragraph might be differ and i am not resposible for any ambigiuty. This post is just for brief description of Delhi City.

City Briefs of Hyderabad

2008-10-23T12:56:00.001+05:30

Hyderabad, the capital city of Andhra Pradesh was earlier known more for its pearls, Nawabs and mouth watering cuisine than for its progressive image now as a hi-tech city. It shot into the limelight as it aggressively wooed IT majors from overseas, and continues to be one of India's first cities to lead the IT revolution in India.
Rated as the fourth fastest growing city in the world by the US based International Market Research Report, Hyderabad is a trend setter for other emerging cities aspiring to cash in on the IT boom. Its twin city Secunderabad, across the Hussain Sagar Lake has shared its success and supported its growth. Hyderabad is well on its way to becoming a global city with India's first Fab City, a silicon chip manufacturing facility being setup with an investment of $3 billion by the AMD-SemIndia consortium.
Hyderabad has a large talent pool, and known for its research institutes and academic institutes, both privately run and promoted by the government. The Birla Institute of Technology will add to the resource pool as it sets up its third campus in India on 200 acres at Jawaharnagar near Shamirpet.
The Hyderabad Information Technology Engineering Consultancy City, or HITEC City is a 151 acre self-reliant business park, jointly controlled by the Andhra Pradesh Industrial Infrastructure Corporation and Larsen and Toubro, and home to the who's who of the IT industry, both national and international.
The next decade will witness a quantum leap in business, as Rs. 70,000 crore will be dedicated to various projects in the city. These include: the Infosys Software Park as it relocates from Bangalore to a campus 4 times its size, a Hardware Park on 2500 acres, the Nanotech Park on 1100 acres, a Gems and Jewellery park on 200 acres, a Textiles Park on 500 acres, the Reliance LPG facility on 25,000 acres, an Aero Park for Aero space and Aeronautics and the Trade Centre Tower.

Infrastructure

Hyderabad has efficient inter city links through air, road and rail. Within the city, apart from an excellent bus transport network, the MMTS rail connects various parts of the city with Hyderabad, Secunderabad, Lingampally and Falaknuma. Hyderabad is scheduled to get a Metro system to help ease urban congestion.
A new international airport was under construction by GMR Hyderabad international at Shamshabad and operational since last 6months. It will cater to 40 million passengers a year and growing as one of the best in this region having world-class facilities.
The expansion of the city has led the Hyderabad Metropolitan Development Authority to augment the civic infrastructure in the city. The 8-lane Outer Ring Road will circle 170 kms on Hyderabad's periphery, free of traffic signals and supported by service lines.
India's longest flyover from Masab tank to the new airport is taking shape at a cost of Rs. 800 crores. The Aga Khan International University will be developed on a 100 acre campus, while a Knowledge Corridor in partnership with the Dubai Government is being planned on the stretch between Kanamet and Kollur.

Disclaimer- Figures mentioned in above paragraph might be differ and i am not resposible for any ambigiuty. This post is just for brief description of Hyderabad City.

City Briefs of Gurgaon of Haryana State

2008-10-23T12:51:00.002+05:30

Gurgaon, a city in the northern Indian state of Haryana, was earlier known to be a sleepy town on the suburbs of the Capital City, Delhi. However, it is a story long ago. Today's Gurgaon is regarded as a synonym to development. With developments in this city of Haryana running fast on track, it would not be wrong to say that a small effort has really come a long way.

Gurgaon bustles in the present day and has become one of the most preferred choices for upcoming companies settling up in Delhi. GE, Coca Cola, Pepsi, New York Life, Baxter, Wipro, Nestle are there and more are coming in. Situated on the highway from Delhi to Jaipur, which is on the verge to become the busiest with the government of both the states putting in efforts for economic growth and infrastructure expansion.

The international airport is shared by Gurgaon to the same level as Delhi.

Infrastructure

Now, Gurgaon is on its verge to become a hi-tech city, accounting for a substantial portion of the nation's investments and profits, both in the public and private sector. The new Gurgaon Master Plan 2021 will give a boost to bits makeover from a developing city to a fully developed one.

The eight lane toll expressway between Gurgaon and the Capital city operational in April 2007 has provided Gurgaon with the fast connectivity to all major places including Delhi International airport and Dhaula Kuan in Delhi over a distance of 28 kilometers, and include 7 flyovers and 5 underpasses along the stretch.

Quality of life in the privately owned estates in Gurgaon is something that attracts high middle class people to look towards to have a permanent home in the city. Offering an enticing array of facilities, Gurgaonites enjoy an exclusive lifestyle with no hassles at all. Initial development which was started by the Biggest Indian Real Estate Developer Group DLF (Dream Land Financers) has now been turned as a biggest industry player at Gurgaon. DLF has turned the livings in Gurgaon from a hostile lifestyle to luxurious styles.

Water supply, electricity supply, guarded security, common area maintenance and sanitation are the factors being a de-facto norm than an exception. Road layout in Gurgaon has apparently improved; it is of much better quality as compared to the other big and influential cities of the country.

With initiatives of the Haryana Government, Gurgaon is likely to become a major hub of special economic zones (SEZs). A big-size SEZ spread over an area of 3000 acres, with a whopping cost of Rs 2060 crore, near Garhi Harsaru in Gurgaon district, has been sanctioned in principle by the government. About 2,400 units are slated to come up in the zone, generating the employment prospects for over 60,000 workers and boosting exports of around Rs. 42,000 crore.

The Haryana Urban Development Authority (HUDA) and Gurgaon administration have fastened their seat belts to take Gurgaon social infrastructure to new heights. From food parks to housing complexes and SEZ to express highways, this cyber city of Haryana is the true reflection of modern India.

Disclaimer- Figures mentioned in above paragraph might be differ and i am not resposible for any ambigiuty. This post is just for brief description of Gurgaon City.

City Briefs of Noida of Uttarpradesh State

2008-10-23T12:45:00.002+05:30

NOIDA is an acronym that stands for New Okhla Industrial Development Authority. The area falls under the catchment region of Yamuna and is an old river bed of the same. It caters to a population of more than 5, 00,000 lakhs people, about 50% of whom commute to New Delhi everyday, solely for the work purpose.
The city enjoys a distinctive status of being as the country's leading industrial city. The fact is linked to the facilities offered at every level of the real estate. However, NOIDA is a home to a multitude of MNCs outsourcing IT services. Most large software and BPOs have set up their establishments in the city, notable being Adobe Systems, HCL, EXL, American Express, Impetus STMicroelectronics, and Xansa etc. With the giant conglomerates like Escorts, Honda - SIEL, Daewoo, etc., Noida is also fast flourishing as a hub for automobile units.

Infrastructure

The Government has left no stone upturned in nurturing Noida's infrastructure. The city falls under Delhi Telecom Network and has 33,000 lines on digital electronic exchange with an Exchange of 10,000 lines designed on EWSD German Switching Technology. This happening place enjoys excellent connectivity with major places especially the Capital, which is the political hub of the country, makes Noida an attractive destination for news channels.

Air, Rail booking services are accessible at Noida itself. Commercial activities have also made rapid strides in the last few years due to a sudden spurt in malls and multiplexes. Centrestage is one of the most exclusive and known malls in Noida.

There are many large open spaces that have been developed as city parks and picnic spots thereby taking everyone's recreational need into account. Also, Ministry of Environment and Forest is coming with a new project to develop a National Botanical Garden that will come over a large area of 300 acres of land.

Anyone scouting huge sense of comfort with an array of infrastructural facilities like hospitals, school, and shopping malls can look upon as Noida residential market, which is undoubtedly a seller's market because there is always a dearth of fresh supply.

Keeping its highly education conscious populace into account, the city is no far behind in educational sector. Almost every sector in NOIDA has a school and hospital in it. Cambridge School, Apeejay School, DAV School, Army Public School, Ryan International, Vishwa Bharti, Delhi Public School, Amity School, Rockwood School, Modern School are some of the renowned schools in Noida.

Noida is not only known for being the industrial hub but the city offers more than one can expect. It is a home to the famous Film city established by Sandeep Marwah, the main operating centre of all the leading news channels and famous studios.

Presently the city also offers the prominent residential segment of Delhi NCR region after Gurgaon. Noida has the tallest building of Delhi NCR region named as Unitech Grande which has skyscraper towers with golf course. The other prominent township in Noida is being developed by Jay Prakash Group (JAYPEE) and known as Jaypee Wish Town Noida which also has the Golf Course.

Disclaimer- Figures mentioned in above paragraph might be differ and i am not resposible for any ambigiuty. This post is just for brief description of Noida City.

Recession or Recess of Real Estate Market?

2008-10-21T16:53:00.001+05:30

Real Estate industry is talking on correction period all over India. Brokers, especially, are absolutely convinced that the market is set to fall. In many areas the property rates have already started falling. Accordingly, Goregaon, Malad, Mira Road, Vasai and Virar on western suburbs and Mulund, Bhandup, Kurla, Chembur and Govandi on central side have started stagnating the level of property prices.

Pune, Nashik, Noida, Jaipur, Bangalore, Chennai and Hyderabad are also feeling the cold wave in the property market. Reason for the same is related with hike in housing finance interest rates and unaffordable property rates.

Investors are, now, not buying and have stopped going in for more investments. Commercial stock is in the market for anything above the cost of investment. Practically, when no one buys, rates are stagnated at some particular point. That is what is happening today. The sale price has stopped further climbing up since there are no takers. Malls are worst hit. The recession started with them, while the exhibiting rates were much less then the actual investments made. Cash and Cheque portion of mall space deals are known to everyone in the trade. The market for commercial properties has already been started to correct its baseless pricing.

It may be a recess. For the time being, investors want market to show its actual colour. And after they sell off certain non moving stock, buying spree may start again afresh. It is also linked with the liquidity crunch in the economy and falling stock exchanges in the country. A lobby of investors does not want share market money to go easily from the real estate market. People who have invested in real estate from earning of share market wants an exit to pay off the liabilities created by them in the share market. Player in real estate market wants the rates to stop climbing up for some time so that they can capitalize on such panic sale. Big game plan is on the hands of few groups of individuals and few finance companies that have entered recently in the trade.

Builders, today, have already started to reduce its price everywhere in the country. Ready stock is still not available as the builders have already sold 30 to 50 % of his stock during under construction to investors. As the Investors want handsome returns on the finished stock while they do not sale in the open market but through the builder only. That stock again sold by the builders to the actual buyers by mounting another profit margin. Hence when the actual user buys the property, he has to pay investor’s hidden margins which change hands five times during the time of construction.

It is nothing but a recess for the players. The rates may go up by the second quarter of the next year 2009. Builders have holding capacity since the project is financed by venture fund people and Mutual funds are searching for the projects. The sale price will be certainly include the interest rates or Return on investment money (22% to 25% of total project). Land and FSI cost is higher and purchasing is already finished for the second rally of property market boom.

As in current market, liquidity has reduced and the funding by the PE firms or Mutual funds has mostly stopped and hence, the construction & launching of the project has just held up or been delayed by one to two quarters some time a year as well.

So in view of current market scenario, we can easily understand that the Real Estate market has effected very much with the recession of Economy.

Unitech is in process of selling his telecom arm to Telenor

2008-10-21T16:32:00.000+05:30

Indian real estate developer Unitech is in talks with Norwegian telecom group Telenor to sell a stake in its nascent telecoms venture.

Telenor said last month it was open to possible entry into India's growing mobile market, as part of its Asia-focused investment strategy. Telenor already operates in Pakistan and Bangladesh and says it is the second biggest non-Asian operator in Asia after Vodafone.

As per industry sources, the deal has already in progress and can be wrapped up any forthcoming days. As per market information, Unitech was looking to sell a stake of more than 40 percent in the venture to be branded Unitech Wireless, which has licenses to operate in India's 22 service areas and plans to launch services by March 2009. But Unitech has declined to be specific on valuations.

Last month, another Indian telecoms start-up, Swan Telecom, which has licences to operate in 13 service areas, sold a 45 percent stake to Emirates Telecommunications Corp ETEL.AD for $900 million, giving Swan a $2 billion valuation.
Unitech, with 22 licences, should be valued at a much higher price, the industry source said.

Unitech is India's second-largest listed real estate firm. Earlier this year it got the licences through its subsidiaries and has been awarded radio spectrum in 12 of them so far.

Foreign players have been interested in picking up stakes in Indian telecom firms to cash in on the 8-9 million mobile subscriber additions every month that make the country the world's fastest-growing market for wireless services and the second-largest such market after China.

Home buyer in India awaits price and mortgage lending cuts

2008-10-21T16:24:00.000+05:30

Due to recent financial crisis, potential buyers continue to wait and watch on the sidelines of Indian real estate market. In view of that, Real estate developers will need to cut prices sharply in the second half of the financial year to convert demands into actual sales. Some small size developers has already started to offered the customers up to 15 percent discounts, waivers in registration fees or stamp duty and free parking spaces, freebies etc, but they are unable to excite the buyers.
Present festive season of Diwali might be good for the developers as they are hoping in increase of demands. If if it has not been happened, it will effect the industry and surely the developers will think to reduced the prices or raise the discounted amounts on the respective apartments.

Developers are also facing a cash crunch as steep restrictions on bank lending and weak equity markets limit their fund raising options and the global credit crisis has dried up private equity funding as well.

"The tightness will continue for a few more months, given the difficulty in raising capital," Macquarie Research said in a sector note.

Recent moves by the authorities to free up bank funds for lending may not help the real estate industry.

High unit prices have made home purchases unaffordable for middle income buyers, as mortgage rates remain near peak levels and seem unlikely to come down soon.
A domestic brokerage has estimated that the rise in mortgage rates has pushed up monthly payments for home buyers by a quarter, compared to levels in 2005.
Till now everyone buyer was taking back his hands from investing in property market due to higher rates of interest & properties. But now, as the scenario has been changed due to current financial crisis and liquidity problem with banks, buyer are hoping that interest rates and property rates will reduce which will increase the demand of real estate and the affordability of houses for middle income groups.