Real estate rebound on shaky ground

By: Karshni on 10:07

Houses have traditionally sold well during the festive season, normally peaking around Diwali. Buffeted by rising cost of land and construction in an economy that was lethargic at best, the real estate sector had looked forward to the festival season to offload rising inventories. But the expectations were belied.

According to experts, developers and brokers, this festive season saw the worst period after the global recession struck in 2008-09. Instead of high demand and blockbuster sales characteristic of the period, developers had to resort to freebies and discount schemes to lure customers. And yet, the season, which normally accounts for as much as 25 per cent of the total annual sales of houses, remained sluggish.

"This has been one of the worst years in the realty sector… sales are down, inventory is high and prices have peaked," says Pankaj Kapoor, managing director, Liases Foras, a real estate research firm. "There is a wide gap between affordability and pricing, which is why sales are not happening. There is no oversupply. It is just that supply has out-priced consumers."

The feeling among developers is similar. "The overall sentiment is weak," says the chief executive officer of a north India- based real estate company. "The last period which was also the worst for the industry was in 2008-09 when global recession kicked in." And, he adds, "Nothing will change before the general elections in 2014. This time, domestic factors are taking a toll on the industry."

Of course, there are other developers who gamely try to ignore the disappointments of the festive season. Pradeep Jain, chairman of Parsvnath Developers, says, "We normally do not expect any big sales in the festive season. People are busy, even we are busy with family engagements. So, there is less of movement in the business." DLF's Ashok Tyagi, the chief financial officer, reiterates this: "One does not buy a home on Dhanteras … it is not gold. Clearly, we didn't have a big launch this Diwali and more so, we had no inventory to sell. We do not focus on festive season per se."

Yet the fact remains that the scenario in 2013 was bleak. New property launches in the residential segment across cities declined 12 per cent in the year, with Chennai recording the sharpest drop at 39 per cent, followed by the National Capital Region at 33 per cent and Pune at 20 per cent, according to a report by Cushman & Wakefield. Mumbai recorded just 6 per cent growth in launches.

The absorption for the January-September 2013 period declined by over 11 per cent, according to the data provided by research firm PropEquity. Out of the committed supply for this year, only 46 per cent was delivered till September.

Inventory had never earlier been as high as this year. At the end of the second quarter this year, says a Liases Foras report, the Mumbai Metropolitan Region had an inventory of 58 months, NCR 41 months, Hyderabad 32 months, Pune 31 months and Bangalore 30 months. (Inventory denotes months required to clear the stock at the existing absorption pace. A healthy market maintains eight months of inventory.)

The year 2013 has been a challenging one for both developers as well as buyers and investors. "The rising prices of land and higher cost of construction made the cash-strapped developers control their new launches and look forward to better sales and the increasing inflation and interest cost made the buyers wait and watch for price correction. Even investors had a hard time exiting their investments," says Sameer Jasuja, founder and CEO, PropEquity.

Though there are some signs of a revival in the market, it will take two to three quarters before the market stabilises. According to the latest Residex, or price index, of the National Housing Bank, prices of residential properties in around 12 cities, including Mumbai, Hyderabad and Chennai, have shown an increase during July-September over the previous quarter of this year.

However, in the April-June quarter 2013, as many as 22 cities including Delhi, Mumbai, Pune, Bangalore and Chennai, saw a fall in prices after a gap of almost two years. Experts had explained this at the time as arising from developers resorting to price cuts to spur demand.

There, however, is a paradox of sorts. While the sector's growth hinges on rising prices, buyers will be deterred by higher costs. "The revival of the sector requires actual price corrections. There is inability to purchase among buyers," says Kapoor. "The economy has to improve. But, it will take about two-three more quarters."

Jasuja of PropEquity says, "As of today, prices already stand corrected. With all the discounts, negotiations, and controlled new launches, the developers are trying to make both ends meet. Further correction can be expected in certain segments in a few locations. But overall, any downward trend across the board looks unlikely." Sanjay Sharma of Qubrex, a real estate consultancy, adds, "There has been no substantial increase in prices in the last six months or so, but if the negative sentiment continues, there will be room for price corrections."

In an attempt to build their image, developers, whose credibility has been hit by delay in deliveries, have been focusing on advertisements this year. "Property and real estate witnessed 30 per cent growth in TV advertising during January-June 2013 in comparison to January-June 2012," data by Television viewership measurement agency (TAM) show.

Perhaps the spiel will hit its mark. For, experts say that this is indeed the right time to buy a property. Says Rahul Gaur, CMD of BRYS Group, a new real estate company: "From the buyer's point of view, it makes sense to buy even with the higher prevailing interest rate due to two reasons: one, prices across the major markets have bottomed out, and two, Reserve Bank of India's tough measures to tame inflation mean interest rates will not come down in the next one year at least. So, any expectation of a price crash or correction is an argument that defies merit."

 

 

http://www.business-standard.com/article/companies/real-estate-rebound-on-shaky-ground-113122500778_1.html

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Realtors hopeful, say slump in real estate market will end soon

By: Karshni on 09:28

SLUMP in the real estate market is likely to end soon. This was the general feeling and hope of the realtors who participated in the exhibition "Estate avenues, real estate carnival-2013" organised at South City. The two-day exhibition concluded on Sunday evening.

"We hope that the slump will fade in the coming months as the hosiery season has done well and investors will be coming back to the market soon," said Mohinder Goyal, owner of Janpath Estates, a luxury housing project in South city.

Vikas Passi, MD of Paras Mani Buildwell Private Limited, who is running multiple projects in Punjab, said: " Financiers' money is stuck in unapproved colonies and once this regularisation process is over, we are sure that real estate market will see a boom. Such a slump was seen in 2008 but it was over in a year, but this time it has become longer."

Passi, who is coming up with a Pearls Apple City on Ferozepur road apart from his other projects in Zirakpur and Ludhiana, said, "More and more people have invested in unapproved colonies. We hope the money stuck in these colonies will flow into the market in the coming months after they complete the formalities of getting them approved."

Passi made a case for easy regulations from the state government because at the moment heavy fee for approved colonies is a hurdle and the slow process to approve the colonies is another problem. "I had applied for approval of Apple City one year back, but still the application is in the pipeline," he said.

The developers of Imperial Golf Apartments, another approved township coming up at Mullanpur, also expected the market to improve as hosiery season had done well.

At the exhibition, top investors, most of them NRIs, were honoured at a function organised late in the evening.

 

 

http://www.indianexpress.com/news/realtors-hopeful-say-slump-in-real-estate-market-will-end-soon/1210914/

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Realty stocks start buzzing as credit disbursement picks up

By: Karshni on 09:26

Like several other beaten-down sectors, real estate stocks, too, have been buzzing in recent times. Over the past month, the BSERealty Index has returned 11 per cent, while the BSE Sensex has risen four per cent.

The biggest reason why this sector has come back into focus is the return of liquidity. Banks have started lending to the sector after a long time. Credit disbursement to the sector has risen 19.6 per cent, compared to last year, with 21 per cent increase in disbursement to real estate companies and 19 per cent increase in mortgages. As a percentage of total bank credit, disbursement to the sector had fallen to 10 per cent in January, which is now beginning to pick up. Analysts believe this is a good sign.


 

Over the past few months, demand for real estate has seen a sharp fall and companies have announced significantly fewer projects. In fact, new launches of some of the key listed players declined to three million sq feet in the second quarter of FY14, from the 10 million sq feet they announced in the first quarter. The total absorption also fell to 70 million sq ft in Q2, from 95 million sq ft in Q1. Goldman Sachs believes investors’ focus will remain on execution, given the uncertainty over demand.

Other analysts believe demand could stage a comeback in FY15, as enquiries are picking up. While demand in southern markets have been largely intact, Karvy Stock Broking sees initial signs of pick-up, as inquiries have started building traction, with the return of fence sitters. Also, they believe the recent success of launches like Kalpataru Sunrise, Thane & Lodha Rise, Dombivili suggests there is latent demand. With the regulator coming out with its final guidelines on real estate trusts, the demand for real estate would pick up in coming months. The announcement of policy on cluster development in Maharashtra would give a fillip to the real estate market in Mumbai and its suburbs. While remaining cautious on companies with high debt, the view on the sector is beginning to turn.


http://www.business-standard.com/article/markets/real-estate-stocks-start-buzzing-as-credit-disbursement-picks-up-113122400535_1.html

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Realty firms seek priority sector status for low-cost housing

By: Karshni on 22:48

After exporters, real estate companies are demanding a priority sector tag for loans to the low-cost housing sector.

“RBI (Reserve bank of India) should expand its scope of ‘priority lending’ to cover lending to developers involved in low-cost and affordable housing, as cheap funding is extremely critical for them to develop low-cost housing projects,” says a report by the Confederation of Real Estate Developers’ Associations of India and Cushman & Wakefield.The report, which comes ahead of RBI’s mid-quarter monetary policy review scheduled for Wednesday, doesn’t specify what is meant by low-cost housing. Budget 2012-13 had provided interest subvention of one per cent on housing loans of up to Rs 15 lakh, provided the cost of the house didn’t exceed Rs 25 lakh. Housing loans of up to Rs 15 lakh to individuals already come under priority sector. Real estate companies want this to be extended to loans availed by developers. These companies also want RBI to declassify the real estate sector as high-risk. This, the report said, would be possible if the sector was given infrastructure/core sector/industry status. “Housing should be recognised on a par with the infrastructure sector and should be given cheaper project finance. Also, the roll-over facilities should be on a par with those of other industries,” the report said. Real estate companies have said currently, the sector has a high risk weight of 1.25. Lowering of risk weights will result in lower interest rates on loans and increased availability of banking and financial institutional funds to developers, as well as individuals. The companies also want RBI to promote the secondary mortgage market through mortgage-backed securities and collateralised mortgage obligations, with safeguards to avoid a sub-prime crisis.

They said the persistently high inflation had hit individual buyers in many ways. Amid lower disposable incomes and savings, they were faced with increasing housing prices and the high interest rates on mortgages.

The report said the increasing population and urbanisation, coupled with the housing shortage of 62.45 million units, was leading to huge stress on the economy. Currently, an estimated 65.5 million people reside in slums. While many countries had a correlation of housing to gross domestic product that exceeded 0.9, in India the correlation was estimated at 0.78, the report said, adding it was estimated the sector had forward and backward linkages to about 300 ancillary industries.

http://www.business-standard.com/article/finance/realty-firms-seek-priority-sector-status-for-low-cost-housing-113121700166_1.html

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Now, priority sector tag for low cost housing sought

By: Karshni on 21:49

After exporters, real estate players have demanded the priority sector tag for low cost housing.

"The RBI should expand its scope for 'priority lending,' to cover even lending to developers involved in low-cost and affordable housing as cheap funding is extremely critical for them to develop low cost housing projects," says a report by The Confederation of Real Estate Developers’ Associations of India (CREDAI) and Cushman & Wakefield.

The demand came just ahead of RBI's monetary review on Wednesday.

Meanwhile, lending to individuals for housing up to Rs 15 lakh already comes under priority sector. The real estate players want this to be expanded to loans availed by developers as well.

Though the report does not say what is meant by low cost housing, the Budget for 2012-13 gave the interest subvention of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed 25 lakh. 

The players also wanted RBI to declassify the real estate sector as high risk. This, the report said could be possible if the sector gets the status of infrastructure or core sector or industry.

"Housing should be recognised at par with as infrastructure sector and should be given cheaper project finance and the roll-over facilities also should be at par with other industries," the report said.

Currently, real estate has a risk weight of 1.25 which is quite high, the players said. Lowering of risk weight in turn will result in lower interest rates on loans and increased availability of banking and financial institutional funds to both developers and individuals.

These players also demanded that the RBI promote the secondary mortgage market through mortgage-backed securities (MBSs) and Collateralised Mortgage Obligations (CMOs) with safeguards in place to avoid a sub-prime crisis in India, similar to that in the United States.

The players said the persistently high inflation rates have made individual buyers suffer in multiple ways affecting their buying ability. Besides having less disposable incomes and savings, they are faced with increasing housing prices, further compounded by the high interest rates on mortgages.

The report said an increasing population and urbanisation coupled with the current housing shortage of 62.45 million units in India is creating a huge stress on the economy as an estimated 65.5 million people currently reside in slums, which hampers their social and economic health.

Consequently, while many other countries have a correlation of housing to GDP that exceeds 0.90, in India the correlation is expected to be around 0.78, though it has also been estimated that the sector has forward and backward linkages to over 300 ancillary industries, it added.

http://www.business-standard.com/article/finance/now-priority-sector-tag-for-low-cost-housing-sought-113121700166_1.html

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‘India should up its transparency quotient’

By: Karshni on 22:03

Global investors in real estate are skipping India and moving to countries like Indonesia and China to make investments, as issues such as regulatory framework and returns are still a matter of concern here.

'“India, China and Indonesia are all markets with strong underlying growth. However, from an investor standpoint, they (the investors) look at various parameters such as transparency, returns, legal protection among other,” Colin Dyer, President and CEO of real estate brokerage and consultancy firm Jones Lang Lasalle, told Business Line.

“In that sense, India still lags behind. India is considered a high-risk market. India needs to up its transparency quotient.”

Asked about the investment in real estate, Dyer said: “We expect a modest 10 per cent increase in overall realty investment.

“The money will flow into countries which are risky but have high returns and emerging economies.”

Dyer said several private equity players are keen to invest in India, but their earlier experience has been mixed.

“Private equity firms seek stable assets. There is lot of appetite in the completed office space, especially in the top eight cities. The tier 2 and 3 cities really haven’t developed the way they should have been,” he added.

Speaking on the trends in the realty segment, Dyer said globally the realty market is improving.

Flat growth

“In India, the growth has been rather flat. We hope we will see some momentum in the sector after the general elections in 2014.

“Despite policy changes such as allowing FDI in retail, it hasn’t really translated into huge space absorption,” he pointed out. He added that residential will continue to see growth in terms of offtake.

Asked about the introduction of Real Estate Investment Trust (REIT), Dyer said it is a step in the right direction.

“The Indian Government has taken the best international practices. REIT will bring in the much needed transparency and also restore investor confidence, both domestic and international,” he said.

http://www.thehindubusinessline.com/companies/india-should-up-its-transparency-quotient/article5463031.ece

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Realty-high GSC to invest $1 bn in India over 3 yrs

By: Karshni on 22:02

A slowdown in the real estate space does not seem to have dampened US-based private equity firm Golden State Capital (GSC), which has decided to invest close to $1 billion in India over the next three years through its real estate investment trust (REIT). It also expects to get its REIT listed on the Singapore stock exchange next year.

"Together with our investors, we are looking for stabilised office assets that are FDI (foreign direct investment) -compliant. We will have an appetite of close to $1 billion in the next three years, if we get opportunities at appropriate valuations," GSC Chairman Sumit Nanda told Business Standard in an interview.

The firm is looking at a REIT listing of above $500 million. "We are already evaluating some deals. We have identified our partners, consultants and investors… looking at assets built and leased in the last two to four years in a very competitive environment, besides stabilised assets with blue-chip tenants. Under the REIT, we are targeting opportunities that are fully leased out or have certainty to be leased out soon."

He also said GSC was bullish on the long-term potential of these assets, as cost of construction in India had been rising rapidly due to inflation. "We see REIT as a good platform to acquire high-quality office assets in cities like Gurgaon, Noida, Bangalore, Pune, Chennai, Mumbai and Hyderabad. Our investors would look forward to stabilised returns and a robust diversified portfolio."

REIT is a vehicle that invests in real estate assets to generate income, which is passed on to investors.

Like stocks, REITs are listed and traded on stock exchanges.

GSC recently launched Burman GSC, its real estate joint venture with the Burman family, the promoters of the Dabur group. Nanda did not share specific details of the JV, but said: "We are working on our strategy; the details would be shared in the coming months."

Started in 2000, GSC focuses on the US and Indian markets, with operational offices in these two countries and Singapore. It had first entered the Indian market in 2002, when it started construction of leased assets in India by reconverting industrial buildings. In 2008, it entered into a joint venture with Ascendas (through a special-purpose vehicle) to develop a 62-acre IT SEZ in Gurgaon, according to information available on its website.

Asked why GSC was re-entering India at a time the realty sector was facing a slowdown, Nanda said: "We believe in the economy's long-term potential. Yes, there are challenges in the short term, but we believe the economy will see a turnaround soon." There could be volatility in the short run, but the company is expecting "emergence of a new chapter in the India growth story" over a three-quarter horizon. According to Nanda, the country presents great opportunities for long-term investors and real estate has been a preferred sector.

REIT was a great platform for offshore investors - especially in Singapore, where such an investment was considered secured - to get stabilised returns. There was a greater upside in investing in REIT than in conventional fixed-income products, he added. The Securities and Exchange Board of India's (Sebi's) draft guidelines for REITs, released in October, will enable Indian realty companies also come up with REITs. The regulations are expected to be finalised within a year.

THE GAME PLAN

On radar

GSC plans to acquire high-quality office assets in India through REIT platform

The India story

Over the next three quarters, the company expects a new chapter in the India growth story

Listing

$500-million listing of the PE firm's REIT likely on the Singapore stock exchange next year

Joint venture

GSC has entered into a JV with Dabur's Burman family to launch a real estate company.

http://www.business-standard.com/article/companies/realty-high-gsc-to-invest-1-bn-in-india-over-3-yrs-113121600054_1.html

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BJP victory revives real estate sector

By: Karshni on 22:01

The victory of the Bharatiya Janata Party in four state assembly elections has given a sigh of relief to developers and investors, who say that the slowing real-estate market has started reviving.

Boman Irani, chairman of Rustomjee Group, said there were many factors helping in the revival of the property market. “The sentiments are changing. People have started making inquiries. The share market has also gone up. It is a positive sign,” said Irani.

Pratik Shroff, executive chairman of Shivam Developer, has decided to launch a residential project in Panvel shortly. “Earlier, we were in dilemma whether the project should be launched or not?

The result of the four assembly elections has brought some clarity. If things continue the way they are now, then the market will bounce back. After the shameful defeat at the hustings, Congress vice president Rahul Gandhi has promised to make some positive changes in the party and in government as well. It is a significant move that will change the market sentiment,” he said.

“The result of the four assembly elections will hopefully force the government to take quick decisions and work towards completing the economic reforms covering all sectors, including the real estate, “ said Lalit Jain, president of CREDAI, the umbrella body of developers in India.

Kalpataru has also launched the ‘Sun Rise’ residential project in Thane. National Builder, Paradise and Lakhani are also launching their projects in Navi Mumbai. “There are several developers who were reluctant to launch projects. But they have started reviving their plans. In the coming days, several residential projects will be launched. We have been getting many phone calls. People, including NRIs, are showing interest in parking their money in real estate,” said Kailash Patil, managing director of Thane-based Sweat Home brokerage agency.

http://www.dnaindia.com/mumbai/report-bjp-victory-revives-real-estate-sector-1935771

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Real estate rides wave of growth in 2013

By: Karshni on 01:03

The city has surged ahead in the race with Thane on the real estate front this year, with 8,845 units being up for sale in the last 12 months as against 5,406 units the previous year. A study done by Cushman and Wakefield (C&W), a global property consultant, revealed these statistics.

During the same period, Thane saw just 2,667 units being up for sale, compared to 8,675 units in 2012.

A senior analyst of C&W said, "Navi Mumbai has higher number of units as developers have launched big projects. Property prices are bound to correct considering the quantum of supply of residential units hitting the market in both Navi Mumbai and Thane."

Navi Mumbai saw an increase in the number of units in the Rs 75-lakh to Rs 1-crore categories in the nine months till September. During the same period, in Thane there was an increase in units costing between Rs 1 crore and Rs 1.25 crore.

"Developers are keeping new launches in check to bridge the supply and demand gap," said a Thane-based property consultant.

"What I cannot fathom is why developers are still shying away from correcting the prices to boost sales. A majority of them are facing severe cash crunch. All their projects are getting delayed by an average of two years. In the process, neither the developer nor the investor is benefitting," said another property consultant.

Rising inventory levels are putting a lot of pressure on realty developers in the expensive property market in Mumbai. About 2,90,000 residential units are under construction in Mumbai, while unsold inventory levels are close to 1,30,000.

Sources from C&W said launches in Mumbai were healthy during the year and increased by 6% compared to 2012. The contribution of 1BHK housing units in the range of 600 sq ft to 720 sq ft was also high in suburban and peripheral locations.

Sanjay Dutt, executive managing director of C&W, said, "The capital values in Mumbai have been stable in the fourth quarter compared to last year. However, with capital values steadily increasing, rental yields in the city have declined."

http://timesofindia.indiatimes.com/city/navi-mumbai/Real-estate-rides-wave-of-growth-in-2013/articleshow/27316201.cms

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Real estate sector looking up in Gujarat

By: Karshni on 09:35

After a lull, Gujarat's real estate sector has started looking up and is reflected in the government's income from the stamp duty and registration fee going up this year. The collections had been in the negative last year largely due to discounts and hopes that the market will revive in coming months. 

As compared to last year's average monthly collection of Rs 209 crore from April to October, the government collected Rs 396 crore per month in the same period this year. 

"Investors and buyers have started investing again as they feel that the market rate will increase soon after Lok Sabha elections," says Yogesh Bhavsar the president of Gujarat Institute of Housing and Estate Developers (GIHED). 

Jaxay Shah, vice-president of the Confederation of Real Estate Developer's Associations of India (CREDAI), says, "The good monsoon has revived the industry." 

The government collected Rs 2,776.70 crore between April and October this year. In 2012-13 , the revenue department had missed the budgetary estimate of Rs 5,000 crore and even revised the target of Rs 4,800 crore. It collected only Rs 4,424.51 crore, about Rs 600 crore less than the estimate. However, the department is hopeful of achieving the Rs 5,000 crore mark this year. 

"Except for June, we have been registering better growth every month. Our monthly average collection is almost Rs 187 crore higher than the last year's average during the same period. Usually, it is in February and March that people rush to register their properties and hence we expect good collections in the last quarter," said a senior official. 

It is for the third consecutive year that the government has not increased its target for stamp duty collection and registration fees keeping it at Rs 5,000 crore while the revenue targets for Value Added Tax (VAT) and other taxes have been increased substantially. 

Figures suggest that the size of the state's real estate sector reached Rs 76,271 crore in 2012-13. This does not reflect the undervalued property transactions.

http://timesofindia.indiatimes.com/city/ahmedabad/Real-estate-sector-looking-up-in-Gujarat/articleshow/27267590.cms

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Real estate investor sentiment to remain damp till 2014: PwC

By: Karshni on 23:32

Indian cities have slipped in the Asia-Pacific rankings of real estate investment destinations, with only Bangalore featuring among the top 20 cities, according to a report published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) on Tuesday.

Compared to the previous year’s report, Bangalore slipped to the 20th place from 19th and Mumbai dropped to 23rd from 20th, according the report, Emerging Trends in Real Estate Asia Pacific 2014.

While Delhi has maintained its ranking at the 21st position, Chennai has made it to the list for the first time at the 22nd.

This is a sharp fall from the rankings in 2011, when Mumbai and Delhi were among the top five real estate investment destinations in the region.

These low ratings are due to the ongoing economic problems in India, an uncertain currency outlook following a mid-year plunge in the value of the rupee and an investment environment widely perceived to be unfriendly to international investors, the report said.

“Real estate investors are shying away from investing in India and the wait and watch mode will continue till the calendar year of 2014.” Gautam Mehra, executive director at PwC India, said.

http://www.livemint.com/Politics/PwjfzxNDcHiqu5lNQTC8tN/Real-estate-investor-sentiment-to-remain-damp-till-2014-PwC.html

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Real estate investors pick Chennai over Mumbai, Delhi: PwC survey

By: Karshni on 23:31

Domestic as well as international investors are looking at newer cities with stable assets for investments, a trend that will be prominent in 2014, and accordingly Chennai jumps to the hot-list for the first time, says a PwC survey.

According to the survey, titled ‘Emerging trends in real estate in Asia Pacific 2014’, Chennai has for the first time emerged in the top 25 real estate destinations list in the Asia Pacific region.

“Cities like Bangalore, Delhi and Mumbai have been in the top 25 list as preferred destinations. This indicates that there has been a slight shift in investor interest from conventional assets in prime markets to newer and stable assets in niche markets,” PwC India executive director Gautam Mehra said on Tuesday.

While Bangalore ranked 20th in the list, Delhi stood at 21st, Chennai 22nd and Mumbai 23rd. Bangalore and Mumbai slipped from their positions compared to 2013 rankings where they stood at 19th and 20th, while Delhi maintained its ranking at 21st position.

http://www.financialexpress.com/news/real-estate-investors-pick-chennai-over-mumbai-delhi-pwc-survey/1206014?rheditorpick

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Bengaluru witnessed highest investment value in 2013

By: Karshni on 09:46

The total relocations across top eight cities in the first half of 2013 was at 5.46 million square feet which was 2.5 times higher compared to the same period last year and is one-third of the total leasing activity, said Cushman & Wakefield, a global real estate consultants, in its latest report. “The markets have seen a large number of corporate relocating and consolidating their operations within a city to locations with quality construction with space scalability options at rentals lower by as much as 15-30 per cent. IT/ITeS saw major relocations across the top eight cities to peripheral locations,” Ritesh Sachdev, Executive Director, Tenant Strategies & Solutions, Cushman & Wakefield.

During the first half of 2013, Bangalore recorded the highest proportion of relocations with a substantial increase of more than three times when compared to the same period last year. Companies relocated from locations such as MG Road, Millers Road, Vittal Mallya Road and Residency Road to peripheral regions such as the Outer Ring Road. Huge increase in commercial real estate has also been recorded in cities such as Delhi, Mumbai, Hyderabad, Chennai, Pune and Kolkata, main reason being lower rentals and more available office space in outskirts of cities.

Commercial real estate absorption is expected to pick up at a steady pace with 28 million sq ft to be absorbed by 2015, Cushman & Wakefield has said.


http://www.moneycontrol.com/news/real-estate/overall-investments-up-26-in-the-real-estate-sector-for_1003506.html

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Reforms in real estate sector to boost FDI, says Credai

By: Karshni on 10:42

Reforms in the real estate industry, such as bringing in more transparency and setting up of regulatory body, would boost foreign direct investment (FDI) in the sector by at least 20 times, said Confederation of Real Estate Developers' Association of India (Credai).

“We hope the reforms prescribed in the upcoming bill would be acceptable to global investors. And hence, the inflow of foreign funds, which is around $220 million every year in real estate sector, could shoot up by about 15-20 times,” said Sanjeev Srivastava, vice president of the property developers’ forum at a media conference here.

The inflows would be mainly from the US, Europe and Gulf countries for setting up of large residential complexes across India, he added.

To sort out various problems and constraints of the sector, the forum is organising National Conclave 2013 on December 13- 14, in New Delhi. The policy makers and industrialists from the sector have been invited to join the conference, where draft guidelines will be prepared to overcome the problems.

“The conclave will give us a chance to convey our problem and understand the viewpoint of the government. About 23 members from Odisha will join the conclave,” said R N Kar, chairman of Credai Odisha chapter.

The Real Estate Bill, 2013, seeks to set up a regulatory authority to protect consumers and promote the real estate sector. The bill was tabled in the monsoon session of the Parliament and has been sent to a standing committee for further suggestion.

Credai said, establishment of a regulatory body will address the disputes and refurbish the image of the industry, which has taken a knock in the past few years amid reports of forgery and delays in property transfer by developers.
“The regulatory body will ensure more transparency in the sector, which will boost demand for houses as well as investments as the builders will have to follow international standards,” said Srivastava.

As per a report, about $ 42 billion investment is needed for the Indian real estate sector.

“The support from the governments (in form of infrastructure spending) and from banks (in form of loans) is not sufficient. So India needs large foreign investments for better growth of the sector,” explained the Credai official.
He rubbished the charges of spurt in property prices once foreign money seeps into Indian markets.

“Look at the airlines industry, the rates did not go up because of investment by foreign players. Rather it will create competition and prices would actually correct,” he said. 

 

 

http://www.business-standard.com/article/companies/reforms-in-real-estate-sector-to-boost-fdi-says-credai-113120400917_1.html

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Does real estate give spectacular returns?

By: Karshni on 09:54

A client called me for advice on a real estateinvestment. He had recently sold some old family property and wanted to invest his share of the proceeds in a commercial property. Real estate dominated his portfolio, so I told him not to put all eggs in one basket. The client shared his inherited piece of wisdom that since time immemorial, real estate has given great returns: "Invest in thousands and reap in lakhs."

In this case, the inherited property had been bought by his grandfather for a paltry sum of Rs 99,000 in 1959. It was sold at a stupendous price of Rs 2.50 crore this year. In fact, had it not been for some legal issues about tenancy and some family issues, the sale price would have been much higher.

My next question to the client was if he knew how much returns he had made. Given my tone of questioning, he became cautious. He hesitatingly said, "It is less than 11 per cent." And after taking capital gains tax into account, the returns stand at 10 per cent, I added. The return may not be bad but it's not spectacular either.

A simple calculation convinced him that. I told him if his grandfather had actually put the money in an asset class that could deliver 15 per cent a year, the sale price would have been Rs 19 crore. I informed him the BSE Sensex had delivered 17 per cent a year in the past 34 years, that is, since its inception. And the returns from the Sensex were tax-exempt, too.

I was not telling him equity was a better investment but that no one should get swayed by the large investments that real estate entails. The client was not alone in vastly overestimating the actual returns from real estate due to the long period of holdings and the huge investment values. After all, an investment that multiplied 250 times can't be anything but spectacular. What he (and most real estate investors forget) is that over long periods it is not the high returns but the power of compounding that is producing the huge sale price. In our workshops when we ask, for examples, of spectacular investments that have multiplied 100 times over long periods and then ask them to guess the actual rate of return, we find most people's guesses are way higher than the actual return. Nobody, except perhaps a Shakuntala Devi, can actually work out the compounded return in their heads without the use of an excel sheet.

The belief that real estate gives spectacular returns is so widespread that an investment expert I met extolled the virtue of investing in a plot on the outskirts of large cities. It is available in lakhs today and because it is illiquid you won't be able to sell it. You will reap a sale price in crores in 20-25 years, he told me. I asked him an estimate of the sale price in 25 years and his best estimate turned out to be just a good return, not a spectacular one. Add the risk of encroachment, zoning changes, compulsory acquisitions at low prices and so on. If you consider the time and effort required to manage an investment in a remotely located plot, even this good return will start looking a little inadequate.

I showed him our research data in six Mumbai localities (based on the ready reckoner prices from 1990 to 2013), which showed the 10-year moving average return of the best performing locality was 8.96 per cent. In fact, the best 10-year return was 15.95 per cent before tax.

I am not trying to argue that real estate is a bad investment. Just that it is like any other investment, with risks that require the reasonable return it provides. It should be a part of any portfolio that is big enough to accommodate the lumpy nature of its investment. And clearly, buying a house for yourself is not an investment. For most people, the psychological stability of having their own house adds tremendous value and makes this a must.

Let me return to my client. What did he do? The last I heard is he had bought the shop he had asked me about.

Clearly, my client is not the only one who continues to follow this dated advice by Mark Twain: "Buy land. They've stopped making it."

 

 

http://www.business-standard.com/article/pf/does-real-estate-give-spectacular-returns-113120200007_1.html

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Parameters to evaluate luxury apartments before investment

By: Karshni on 10:24

In Indian real estate, 'luxury' is by far the most-abused word by residential project developers. Any project offering basic amenities is classified as 'luxury' in marketing materials, advertisements and pitches. We have actually seen projects wherein 1 BHKs are being offered along with 2 and 3 BHK units being touted under the luxury tag. What is wrong with this picture? 

 

In the first place, luxury living in any context must necessarily involve generous living spaces. Going by that alone, a 1 BHK cannot qualify as 'luxury' by any stretch of imagination. Secondly, the interpretation of luxury in the Indian context also includes an element of exclusiveness. In other words, the buyer of a luxury apartment - apart from superior amenities and facilities - also expects to live in a project which offers a certain socio-economic standard as a neighbourhood. Therefore, when a project offers one-bedroom apartments, it automatically disqualifies itself from the 'luxury' classification. 

 

Given that developers will continue to call every project luxurious, it is important for buyers to understand the definition, context and meaning of luxury in Indian residential real estate. But before this, let us first examine the investment dynamics of genuine luxury homes. 

 

Buying a luxury apartment for self-use already involves the need for multiple checks and validations in any case. However, when it comes to buying such an apartment for investment, the need for 360-degree due diligence is even higher. After all, the final objective is returns on investment. If one is considering investing in a luxury apartment, one must understand what the hallmarks of genuine luxury in residential real estate are: 

 

Location: This is one of the most crucial parameters. Though central location is certainly an important qualifier for the luxury tag in India, a project that stands at a central city junction beset with traffic congestion does not provide a luxurious experience. No matter if a project is 'normal' or 'luxurious', it is not home if one cannot reach it or get out of it. Investors need to look at many location parameters, such whether the project benefits from approach roads that allow for convenient vehicular egress and ingress. 

 

Also, very few people buy luxury homes and then hide them from the rest of the world. Most owners of such a home want others to see and admire their properties, and to entertain people there. Noise and air pollution apart, this purpose is not achieved if the project lies in a chronic traffic gridlock zone. Finally, the owners themselves must have ready access to markets, schools, colleges, hospitals and their offices. And before we forget - the most spectacular edifice of luxurious living falls flat on its face as an investment bet if it is located in a crime-ridden area.

 

The view available to the project’s occupants is also very pertinent. A project may be genuinely luxurious in its internal specifications and amenities. However, if it overlooks a slum or congestion-prone highway, a graveyard or a hospital, both rental and resale potential take a beating. The availability of a rooftop swimming pool and a Jacuzzi in every bathroom will not make a difference - a very basic ingredient of the luxury experience is unavailable. 

 

Floor-to-Ceiling Height: This is one of the most important parameter to evaluate a project's true 'luxury' value. If the floor-to-ceiling height is less than 12 feet, the luxury feel is severely compromised. Moreover, apartments with low ceilings do not lend themselves optimally for tasteful interior decoration. 

 

Project Density: This means the number of people living in the project. There is no ideal thumb-rule for this parameter - however, it is generally understood that a one-acre project should not house more than 60 families. Anything more means that the project does not qualify as 'luxury'. This is because the available amenities are shared by too many people, destroying the project's ambience, exclusiveness, convenience and charm. 

 

Parking: Again, there is no specific yardstick by which to measure parking sufficiency. The commonly followed norm is that the number of bedrooms in a project should equal the number of available car parks. A 3 bedroom apartment should therefore have three parking spaces within the project. Though many luxury projects in the larger cities now offer puzzle-type mechanized parking, the fact is that HNI buyers and tenants actually prefer normal or stack parking.

 

Elevators: The mere provision of branded elevators does not suffice in a luxury project. The project must also have service elevators with separate entries, to ensure that domestic help and external suppliers do not populate the elevators and lobby being used by residents. Investors must also ensure that the elevators are spacious enough to accommodate a stretcher. 

 

Security: Inhabitants of a luxury project do not expect to have to install ugly security grilles over their front doors and windows. They expect to have the assurance that their families and property are safe in all respects. A genuine luxury project has uncompromising human security as well as electronic surveillance and safety measures firmly in place. 

 

As is evident, it takes more than a mere word like 'luxury' to place a project head and shoulders above the rest - and thereby make it a worthwhile investment option. While one cannot stop developers from misusing the luxury tag, it is certainly possible to understand what true luxury - even in the Indian context - really is.

Read more at: http://www.moneycontrol.com/news/real-estate/parameters-to-evaluateluxury-apartment-before-investment_999225.html?utm_source=ref_article

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VAT reality for your new flat

By: Karshni on 11:32

The Supreme Court, in the case of Larsen & Toubro, recently upheld the constitutional validity of VAT levied by State governments on the sale of under-construction flats. It mentioned that the concept of “works contract” applies to agreements entered between builders and buyers for under-construction flats. The verdict has worsened the already low sentiment in the real-estate sector.

The industry (as indeed the end-consumer) should evaluate the implications for transactions.
 

Implications for builders

Builders will have to charge and pay VAT on sale of under-construction flats. It is likely that State governments (particularly Maharashtra and Karnataka) may approach builders to recover VAT for past years. For builders who have already deposited VAT dues (whether during regular assessment or “under protest” pending the verdict), the demand for pending dues may not possibly result in significant interest or penalty burden.

However, the builders who have not charged or deposited VAT are likely to be especially sensitive to this verdict. Several real-estate developers had taken shelter under the Special Leave Petition to avoid VAT payments until now. The VAT demand is likely to be significant for them. Their ability to pay, and the extent to which such payment might strain the industry’s working capital requirement remain to be seen.

On the other hand, certain features available under State-VAT provisions may assist the builders. One obvious relief is the possibility of claiming State-VAT input credits to reduce or offset the gross VAT liability arising from the verdict. Additionally, several State-VAT laws provide composition schemes to compute and pay VAT dues.
 

Implications for flat buyers

As State-VAT is an indirect tax, generally passed on to the buyer, the flat buyer would now bear an additional tax. For buyers who were already charged VAT, the judgment now assures them that it is payable. But the buyers who were not charged VAT should check whether the builder has inserted appropriate tax clauses in the under-construction agreement to recover VAT dues. Generally, builders have been prudent to insert such clauses. Thus, buyers who were not charged VAT on under-construction flats may now have to bear the additional cost (which was not considered at the time of financing the purchase through banks/ financial institutions).
 

Implications for housing

In the recent past, State and Central Government departments have been attempting to provide affordable housing to the lower middle-class urban population, especially in high-priced locations such as Mumbai and Delhi. The Delhi Development Authority (DDA) and the Maharashtra Housing and Development Authority (MHADA) are among them. The implications of the Supreme Court verdict may likely apply to under-construction flats sold to the lower middle-class group. A dilemma may arise over whether the State governments should award concessions or exemptions to certain types of residential projects to ensure VAT is not onerously passed on to the buyers.
 

Implications for tax regime
India is on the cusp of introducing the Goods and Services Tax (GST) to replace its indirect tax system. GST policymakers have hinted that real-estate transactions (buy-sell of residential properties) may not form a part of the initial GST framework. However, the Supreme Court verdict may enable GST to cover agreements for sale of under-construction properties. Thus, the related concerns may continue into future tax regimes as well.

As Supreme Court verdicts go, especially with regard to taxes, this judgment does have far-reaching implications. In addition to the problems related to compliance (such as impact on past VAT dues, cascading impact through interest and penalty proceedings, and so on), there may be associated indirect taxes such as service tax and stamp duties involved. Consequently, the challenges for a real-estate player in managing funds in today’s business environment are likely to compound. 

http://www.thehindubusinessline.com/features/taxation-and-accounts/vat-reality-for-your-new-flat/article5408721.ece

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Price correction in the offing

By: Karshni on 11:30

Real estate prices in the country are ripe for a correction in 2014 as the sharp slowdown in demand coupled with the highly leveraged balance sheets of developers will force players to slash prices to stimulate demand.

Over the last couple of years, residential real estate prices have increasingly become unattractive to unaffordable for buyers. . In the National Capital Region (NCR), for instance, average home prices were nearly 30 per cent higher in the first half of this year compared with the second half of 2010. This is true of most other markets as well — during the same period, prices rose by about 21 per cent in Pune, nearly 33 per cent in Bangalore and around 9-11 per cent in Chennai and Mumbai. Among major markets, Hyderabad (down 9.5 per cent) was the only exception to this trend during this period because of the uncertainty caused by the agitation for a separate Telangana State.

Unsurprisingly, demand has been a casualty of this decline in affordability. In the NCR region, demand is down an estimated 10 per cent in 2013 over and above a 12 per cent fall in 2012. Likewise, demand is down around 8 per cent in Mumbai. Investors too are in wait-and-watch mode. There are numerous factors responsible for this sharp slowdown in absorption, prominent among them being weak macro-economic conditions, high inflation, slower income growth, and high interest rates for home loans.

Slower economic growth has impacted the demand for real estate, particularly in Tier-1 cities. Income growth has not only slowed down but has also become uncertain due to the weak economic environment Both WPI and CPI inflation remain at high levels and we do not see any respite in the short-term. CPI inflation, which is more relevant to the home buyer, is currently a high 10 per cent and is likely to stay elevated .

To curb consumption and bring down inflation, the Reserve Bank of India raised the repo rate to 8 per cent in November. Consequently, home loan rates are also unlikely to come down significantly. At the same time, fresh launches by developers over the last 2-3 years coupled with large unsold inventory has eventually forced many developers into a corner . As home sales slow and cash flows dry up, several developers, particularly small and mid-sized players, are finding it difficult to repay their debt.

The aggregate debt of the companies considered in our analysis stood at Rs.620 billion as of March 2013. Bank borrowings account for around 42 per cent of debt, and the set of players considered constitute about 21 per cent of the total banking debt of the industry. The aggregate operating income of large companies has declined on account of the slowdown in execution and new launches due to weak demand. Consequently, players are selling off non-core assets to repay debt and manage leverage levels. In the recent past, under pressure from their lenders, large companies such as DLF and Unitech have sold their non-core assets to partially repay their borrowings and reduce their debt levels.

No decline

While the borrowings of some large companies have not declined, the high interest towards ongoing projects (which are capitalised) have resulted in negative cash flow from financing for last 3 years. Mid-size and small players are also being forced to consistently raise funds to finance operations. But funds are hard to come by as banking have become increasingly cautious in their lending to the real estate sector.

All this has set the stage for a correction in real estate prices. In major residential markets , we expect prices in the second half of 2014 to be nearly 13-14 per cent lower than in the first half of 2013. In certain prime areas such as South Mumbai and South Delhi, the fall could be even steeper (around 17 per cent).Prospective home buyers in most cities can, therefore, expect better prices than they have seen in the past couple of years.

 

http://www.thehindu.com/business/Industry/price-correction-in-the-offing/article5408794.ece

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Is India under threat of a real estate bubble burst?

By: Karshni on 12:07

Japan, the US, Spain and Ireland are examples of high-profile countries whose economies were destabilised by a real estate bubble burst. How and why does real estate cause economic catastrophe? 

 

Can it happen to India as well? The single common factor for real estate bubble burst across economies is the exposure of the banking sector to inflated asset prices. Economic collapse in all these countries has been led by the banking system. Japanese banks went through a painful period of restructuring in the 1990s while the US, Spanish and Irish banks had to be bailed out by the government. How does the banking system get affected by rising asset prices? Here is a simple example to demonstrate the impact of a real estate bubble burst on banks. Customer ‘A’ borrows Rs 80 from Bank ‘B’ to buy a flat worth Rs 100. 

 

The value of the flat goes up to Rs 200. A goes to Bank B to borrow Rs 180 to buy another flat worth Rs 200. Bank B does not look at A’s income but looks at the value of the flat being pledged. So it lends Rs 180 to buy the second flat. Bank B has now lent Rs 80 + Rs 180 = Rs 260 to A. Bank B has collateral worth Rs 200 + Rs 200 = Rs 400 for the Rs 260 exposure to A. Now, the asset bubble bursts and value of the two flats that A owns drop by 50%, from Rs 400 to Rs 200. Bank B is now left holding collateral worth Rs 200 for loan of Rs 260 to A, who do not have enough income to service that big a loan. A defaults. 

 

A real estate price correction could lead to more NPAs and this could lead to a self fulfilling cycle of a deep rooted correction in the economy. . A real estate price correction could lead to more NPAs and this could lead to a self fulfilling cycle of a deep rooted correction in the economy. In an era of sustained rise in real estate prices, A and Bank B transactions keep multiplying. Banks lend to builders to purchase land and construct buildings. 

 

They also lend to non-banking financial companies, which in turn lend to both individuals and builders. In other words, banks have direct and indirect exposure to real estate. When the bubble bursts, they are left holding worthless piece of collateral. Banks fail leaving depositors in the lurch and the whole financial system collapses if the government and central bank do not step in and bail them out. 

 

How are Indian banks placed in their exposure to the real estate sector? India has seen a ten-year period of rising real estate prices and the sector seems to be cooling off. Commercial property vacancies are 20 percent while residential inventories are rising every day with transactions down 50-60 percent. RBI data on banks as of end March 2013 reveals that banks have an exposure of Rs 1.26 lakh crore to commercial real estate, Rs 4.6 lakh crore to personal mortgages and Rs 2.67 lakh crore to the housing sector.

 

 The NBFC sector, including the housing finance companies such as HDFC and LIC Housing Finance, would have an exposure of over Rs 3 lakh crore. Adding banks and NBFC exposure to real estate, the total exposure is around Rs 11.50 lakh crore. This works out to around 10 percent of GDP. Add to this the black money and unofficial lending that happen. The exposure just gets bigger. However, the economy will not collapse because of a deep correction in prices. 

 

But that does not mean that a real estate price correction will not cause pain and suffering to the economy. Banks’ exposure to real estate is around 17 percent of total advances and if there is large-scale default in the sector, all lending will stop leading to strong downtrend in economic growth. Public sector banks gross NPAs (non-performing assets) as percentage of total advances is 4.75 percent as of March 2013 and has more that doubled over the last six years. A real estate price correction could lead to more NPAs and this could lead to a self fulfilling cycle of a deep rooted correction in the economy. It is best to prick the real estate bubble in India right now to avoid future calamity.

Read more at: http://www.firstpost.com/economy/is-india-under-threat-of-real-estate-bubble-burst-1255249.html?utm_source=ref_article

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Real estate uses child friendliness index to attract buyers

By: Karshni on 11:00

After hotels started offering child-friendly features to attract customers, now it's the turn of real estate to use that index to get buyers and tenants. Apart from child friendliness index, real estate portals are trying to add a silver lining to the slow market by providing reliable information on interior decoration, movers and packers, legal services, and even pest control services. Leading this trend are portals such as Housing.com and Commonfloor.com.

These sites have been started by young entrepreneurs. According to experts, this is giving tough competition to other established players in the market.

“People want to assess/shortlist locations before going out and buying or renting a property. The new sites offer various services which a potential customer would like to have beforehand on his table. It makes house hunting task easier, which is why these sites are growing rapidly and more new sites will keep coming in,” an expert tracking the sector says.

The ‘Child Friendliness Index’, launched by map-based real estate portal Housing.com, will provide users all the information related to schools, parks and hospitals around the vicinity as well its proximity to the area with a rating attached to them – most child friendly, least child friendly and intermediate.

The index measures the vicinity on three different criteria -- the number of schools, hospitals and parks in an area, as well as the proximity of these facilities to the areas. It is currently available for three cities Mumbai, Delhi and Bangalore, Advitiya Sharma, co-founder, Housing.com, told Business Standard.

On Commonfloor.com, which offers apartments/societies management software, also provides services related to home décor, health, education, home appliances amongst others for owners for the flats. And for RWAs (resident welfare associations), it offers a different set of services ranging from car dealers, rain water harvesting, interior design and others. The portal’s strong market is in Bangalore, though it is present in more than 120 cities with its apartment management software.

Sumit Jain, CEO, Commonfloor says,”Definitely, we are giving a competition to traditional portals. Ours is a platform where buyers can make the right decision.”

Housing.com also plans to provide 3D rendering for selling apartments in new projects by developers, which will allow buyers to have a whole picture of the area with zoom option and the vicinity as well through the site. 3D render will produce images based on three dimensional data stored within a computer.

It already offers virtual tour of the apartments up for rent/sale on its site, where users can see the pictures of every room/kitchen/balcony in the house before making a decision. The portal is already live in 10 cities and plans to expand further across India. On the other hand, Commonfloor with a market place model, offers free site visits to the potential customers. It is present in 7 cities with offline presence and plans to expand to 11 cities soon.

 

 

 

http://www.business-standard.com/article/economy-policy/real-estate-uses-child-friendliness-index-to-attract-buyers-113112700770_1.html

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Mumbai Property prices likely to correct next year: Report

By: Karshni on 11:54

Weak absorption and rising inventories in the residential market here may lead to price correction in the early part of 2014, real estate consultancy firm Knight Frank said Tuesday.

Nearly 2.9 lakh residential units are under construction in the city while unsold units stood at 1.3 lakh during the January-September period, Knight Frank said in a report.

"The weakening real estate prices suggest that long- standing stalemate between buyers and builders is finally turning in the buyers' favour. The increase in inventories coupled with weakening absorption levels would put further pressure on prices," its research director Samantak Das said.

Mumbai's unsold inventory level is almost 44 percent in comparison to NCR's which stands at 26 percent even with twice the number of units under construction, the report said.

Owing to weakening demand, new launches in the city plummeted over 40 percent compared to peak levels in 2010 as developers shift focus on liquidating current inventories.

As many as 47,488 residential units were launched during January-September.

"The residential market has been witnessing a steep decline in new launches as well as demandj....Unsold inventory pressure in Mumbai is the highest among all other cities and is depicting a growing trend. We expect a more pronounced price correction which may drive the market to a better equilibrium," he said.

The current environment will put pressure on prices in the medium term and the scenario is expected to last till the forthcoming general elections.

Further, the rise in interest cost and decline in net profit in 2013 will compel developers to lighten load and de-leverage their balance sheets.

"Major listed companies have defaulted their loans this year, which depicts significant stress levels on their balance sheets. Developers are now trying to salvage the situation by limiting fresh launches and boost sales by promotional activities to avoid reducing the base price.

"Overall, the right time for buyers to expect good deals in the market," company's national director Mudassir Zaidi said. 

http://zeenews.india.com/business/realestate/latest-news/mumbai-property-prices-likely-to-correct-next-year-report_89525.html

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Hyderabad realty sector looking up

By: Karshni on 10:42

The Hyderabad real estate sector is likely to get a major boost in the form of landmark projects in a year’s time. The presence of at least three projects in and around the financial district, Gachibowli is expected to give the necessary push to the sector according to the industry.

Key among the proposed projects include the backup headquarters of Bombay Stock Exchange (BSE), the 100- storey business centre of Reliance infrastructure and the permanent office building of the Insurance Regulatory and Development Authority (IRDA).

“These projects are a great value addition to the city, especially to the real estate sector. Besides, the Hyderabad Metro Rail, Information Technology Investment Region (ITIR) and Outer Ring Road projects make Hyderabad a hot destination. The combined strength elevates the city on par with the ones in global league,” said Mr. C. Shekhar Reddy, national president of the Confederation of Real Estate Developers’ Association of India (CREDAI).

Hyderabad has many advantages owing to its salubrious weather, low cost of living, Hindi as a common language and presence of various communities, he says.

The BSE headquarters in Gachibowli resembles the national headquarters in Mumbai according to the managing director and chief executive officer of BSE Ashishkumar Chouhan. The stock market operations and transactions of BSE will be shuffled between the centres in Hyderabad and Mumbai from time-to-time and the switching will be monitored by the Securities and Exchange Board of India, he added.

The estimated Rs. 300 crore facility in financial district will also serve as a data recovery unit in the event of any natural disaster or accident. The construction of the building is almost completed and it will be operational by the end of 2014.

Another notable project is the 100-storey business tower proposed by Reliance Infrastructure in 2007. The project, which was shelved due to changed economic conditions, picked up momentum now. The company has re-submitted the proposal with minor changes and it is under active consideration according to Andhra Pradesh Industrial Infrastructure Corporation (APIIC). The Rs. 8,000 crore and odd project will be coming up near Manchirevula near financial district.

The permanent office structure of the IRDA which is under construction in the same place is also expected to add to the vibrancy of the financial district. The regulator is right now operating out of a small facility in the city.

Further, the Centre’s clear vision on the status of Hyderabad and completion of projects like metro rail will further enhance the advantages of the city in terms of congenial environment for business activity according to industry sources.

 

 

http://www.thehindu.com/news/national/andhra-pradesh/hyderabad-realty-sector-looking-up/article5387954.ece

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Price of apartments in Navi Mumbai set to rise

By: Karshni on 10:40

indiaproperty.com 

 

The price of residential apartments in Navi Mumbai is set to rise as the proposed Navi Mumbai airport project cleared its highest hurdle, with the Maharashtra Government striking a compensation deal with the project-affected persons (PAPs). According to reports, this would bring land worth more than Rs 10,000 crore into the market for development. 

 

The compensatory land that PAPs have been allotted is along the Mumbai-Pune by-pass adjacent to Panvel and is priced at about Rs. 1 lakh per sq metre. This township will be called Pushpak Nagar. Sources at City & Industrial Development Corporation (Cidco) said that land prices in Navi Mumbai would shoot up once land allocation in Pushpak Nagar is started. Mr. Mohan Ninawe, Public Relations Officer, Cidco said that some builders, especially those holding inventory have hiked the price of apartments by Rs 200 to Rs. 300 per sq ft, once the news of the clearance of the proposed airport filtered in. 

 

The price increase is sharpest in areas which are closer to the new airport. Ms. Shalini Singh, Marketing Manager, Viscon Homes Pvt. Ltd is expecting that the price per sq ft would increase by Rs. 100 to Rs. 200. Talking about the prices of apartments in Airoli, she said that currently a 1 Bedroom, Hall, Kitchen (BHK) of approximately 640 sq ft would cost Rs. 50 lakh while a 2 BHK of about 1000 sq ft would be priced upward of Rs. 65 lakh. 

 

According to Mr. Govind Sawant, Proprietor of Sawant Constructions, the cost of apartments in Panvel has gone up from Rs. 4000 Rs. 5000 per sq ft to Rs. 6000 Rs. 6500 per sq ft depending on the exact location of the apartments. Real estate sources have been forecasting that the property prices in Navi Mumbai would be shooting up once the airport project is cleared; however, the long delay, from 1993 when it was first announced, has disheartened many investors and builders. Now the patience of those investors will pay off, one builder said. A lot of activity is expected around Panvel and the areas adjacent; Panvel is the last township in Navi Mumbai and the start of the Mumbai-Pune Expressway. 

 

Land has been appreciating in Navi Mumbai areas such as Airoli, Ulwe, Kamothe, Kalamboli, Panvel, Belapur and so on for the past ten years, on the hope that two major infrastructure projects namely the new airport project and the Rs 9,460 crore Sewri-Nhava Sheva sea link, which would reduce travelling time between Mumbai’s central business districts and Navi Mumbai from one hour to 25 minutes, would take off. The prices in these areas are already at least 25 per cent more than the norm, sources said. Many of the end use buyers who invested in property in Navi Mumbai did so, because the prevailing prices at that time were lower than the Island City. But now the prices, mainly because of speculation, have gone through the roof, Shweta Malik, a resident of Belapur and corporate executive said. 

 

The prevailing high price is one reason that many end use buyers are putting off their decision to invest. Media reports that there are more than 15,000 apartments waiting for buyers in the Sanpada, Dronagiri, Airoli, Taloja, Ulwe, Karanjade, Seawoods and Kamothe areas. In Panvel alone there are over 11,000 unsold apartments. Mr. Ninawe agreed that the builders were holding large inventories During the first two quarters of 2013, there has been relatively fewer real estate transactions in the Navi Mumbai area; builders were not able to off load inventory because of the subdued market sentiment . Builders on their part were not willing to lower prices because of the high input costs such as higher funding costs, high land prices; cost of material and labour had also skyrocketed. New data from Indiaproperty.com indicates that due to the increase in demand apartments in Kharghar and Panvel, some of the industries in Taloja have now moved. Kamothe and Kalamboli are two more markets which have seen spill over residential demand from Kharghar.

 

The report said, “Maximum demand in Taloje is for 1 BHK units with over 80% property seekers looking for a single room unit.” Cidco has announced its proposal of constructing around 12,000 houses in Ghansoli, Vashi, Kharghar and Taloja-Panchanand. In the first phase 2.922 apartments will be constructed in Sector 36 in Kharghar that will cater to the economically weaker sections and lower income groups. These residences will mainly be 1 BHK while 1,224 apartments in the 2 BHK and 3 BHK will cater to the middle income and higher incomes groups and will be taken up soon.

Read more at: http://www.moneycontrol.com/news/real-estate/priceapartmentsnavi-mumbai-set-to-rise_996339.html?utm_source=ref_article

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