April 2010

Hefty Prices Lead to 50% Decline in Mumbai Property Sales

by Paul Joseph April 30, 2010

City developers, who witnessed a revival of sales at hefty prices in the past six months, are now up against buyer resistance. With demand dropping like a stone, the sale of residential flats across segments has nosedived, property experts said. The drop is as high as 50% in some segments. Says Pranay Vakil, chairman, Knight Frank, property consultants: “It is a different dilemma. On the one hand, demand for land has begun. On the other, demand for residential prices is slowing down. The number is big, compared to last October-November. Those two months saw many flats being sold even as developers increased prices to almost the peak levels of 2008.’’ Sandeep Sadh of Mumbai Property Exchange says it is a weird situation. “In South Mumbai, where there are no new constructions, people are deferring buying due to high prices even in resale flats. In contrast, despite having a large number of flats available in the suburbs, buyers are unable to buy due to unrealistically high prices.’’ Sadh says his clients are sitting on the fence and have deferred buying till after August when prices may just become a bit realistic. While high property prices is the biggest reason, Anuj Puri, chairman, Jones Lang Lasalle Meghraj, says the increase in mortgage rates had added to buyer worries. “One reason (why sales picked up earlier) was that pent-up demand from end- users and investors got fulfilled,” Puri said. “By investors, I do not mean speculators, but those who want to rent property out or sell it after a few years. “Demand is now stagnant, which is right. But I fear that if prices go higher, it will result in sales dropping further. It will be a challenge for developers to tackle.’’ Experts believe the drop is significant for the peak season from March to May, when sales are usually high. During these months, prospective buyers come out in large numbers to purchase property for various reasons .Though they grudgingly accept that high property prices are leading to slower sales, developers seem reluctant to take the first step in reducing prices. “Sales have slowed down. Like other builders, I realise prices are high. But people seem to be accepting the rates, and bookings are happening. So, when will correction happen? I cannot say,’’ says Hiren Patel of Atithi Developers, and adds: “But one has to accept that input costs have increased. Prices of cement, steel and sand have increased four to five times. It is bound to have a bearing on prices.’’ Stating that sales have not been affected, Abhishek Lodha, director, Lodha Group, says high prices have affected the industry by 20%. This view was echoed by DB Realty. Venkatesh Iyer of Siddhivinayak Real Estate Consultants says the number of inquiries he gets seldom translates into actual sales. “People’s budgets have become constrained, as prices have increased exorbitantly. In Chembur, prices have jumped from Rs8,000 per sq ft to Rs10,000 per sq ft, to almost Rs14,000 in six months. High prices have affected the resale market the most, as owners find the next new flat to be more expensive,’’ said Iyer. A negative fallout of recent trends is that developers have increased the carpet area-to-built-up area difference to almost 50%. “This is a dangerous trend. There is no clarity on what rate developers have calculated the balcony area, terrace or storage room. Baring a few places, there is no mention of it in agreement papers. It is time the government brings clarity to the issue,’’ said Vakil.

Tagged as: government, industry, knight-frank, lasalle-meghraj, mumbai property, peak, pranay-vakil, real estate, real estate india

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Wadia’s Planning Major Entry into Property Business

by Paul Joseph April 30, 2010

Wadia Group chairman Nusli Wadia is diving headlong into the property business, putting his younger son Jeh Wadia in charge of projects for building malls, five-star hotels and upscale homes on the family’s sprawling land assets. Senior group executive Kaushik Kona was recently shifted from the corporate headquarters to head struggling low-cost airline GoAir so that the younger Wadia can fix his attention on the growing property business of flaghsip Bombay Dyeing, said two executives close to the group. The group’s renewed focus on property means that Bombay Dyeing, whose mainstay has long been textiles, is effecting a significant change in strategy . “It’s only a matter of time before Bombay Dyeing transforms into a property firm,” said a Wadia Group executive , requesting anonymity. Bombay Dyeing’s property business has been turning in profits while textile suffers from the twin effects of falling export orders and gnawing competition in the domestic market. The airline business is the brainchild of Jeh Wadia and has consumed much of his time since GoAir’s launch in 2005 when India’s middle class began to fly in swelling numbers, driven by affordable airfares. Turning the gaze at this juncture is a sign of the group’s lofty ambitions in realty. Even so, Mr Kona still reports to Jeh Wadia, the persons said. The polyester-to-property conglomerate will build a team of experienced professionals to assist Mr Wadia in the business. The group is hiring four expats, who cut their teeth in the Middle East property market, to head projects and design teams, though a senior expat who joined a few months ago recently quit. It has also poached senior executives from rival property firms. “Many executives from places like Dubai are joining us,” said the Wadia Group executive. Old group hands like Rustam Lawyer, who was part of the textile exports business for years, was recently transferred to the property division, said the persons familiar with the group’s plans. Nusli Wadia’s elder son Ness led the property business till he moved to spearhead the Indian Premier League team Kings XI Punjab. Durgesh Mehta, who is tipped to take over as joint MD of Bombay Dyeing from May 1, is part of the real estate review council that the group chairman formed last year to improve efficiencies. An e-mail questionnaire to Jeh Wadia’s office was not answered. His office said he was not in a position to talk as he was busy in meetings. The new team has a vast expanse of land to build the property business. Development of a mill plot in Mumbai, which used to house Bombay Dyeing’s textile factory, could top the agenda. Similarly, IT parks and a five-star hotel are in the works at a 50-acre plot in central Mumbai suburb Worli, which houses the group’s corporate office and Hardrock Café, said the executives. The group has already struck a deal to sell a new four-storey commercial building to Axis Bank, raising more than Rs 600 crore. It had constructed high-end homes at a property in Dadar and sold them to high-profile bankers and executives . “There is one more project in the offing,” said a property analyst. The Wadia family, which owns a 47.11% stake in Bombay Dyeing, is infusing more money into the company through a preferential issue of 3.96 million warrants. The money will be mainly used to fund the real estate business. The real estate business posted a profit before interest and tax of Rs 159.47 crore while the textile division reported a loss of Rs 65.98 crore for the year to end March. The property division also posted a profit of Rs 18.03 crore for the quarter to end December. Nusli Wadia had brought the textile business under the watch of Britannia managing director Vinita Bali to turn around its fortunes.

Tagged as: bombay, business, group, middle-east, property, real estate, real estate india

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Chandigarh property with main prices

by Paul Joseph April 30, 2010

Peddled as India’s foremost intended city, Chandigarh is express prosperous in the realty zone of the country. Lone of the most important aspects contributing to the landed property expansion in Chandigarh is the NRI savings pouring in the city. A plenty of well-heeled Punjabi NRIs are forcing enormous funds into Chandigarh property bazaar. Allowing for this, all the famous landed property builders are mostly launching top housing projects in the city. In addition, it’s not only Chandigarh but also the close at hand regions of the capital city are increasing reputation in the middle of the investor as well as the builder’s pieces. Apparent of all the commercial expansions taking place in Chandigarh the inhabited realty of the city is also thriving. Amidst the city’s continuing industrial revitalization, the suburban real estate bazaar in Chandigarh is mounting extra speedily. Regardless of the want of infrastructure and added amenities in the future districts of Chandigarh, buyers from diverse fractions of country are purchasing real estate at this time. Principally, investments are completed predicting the profitable arrivals these properties will offer. A supplementary benefit of investing in Chandigarh realty is short investment when compared by the metros, hitherto a corresponding quantity of hire returns, in case the buyer hopes to lease the property. Chandigarh real estate Prices are more economical than the metros but an average 2 BHK can be rented out for Rs 5,000-8,000 per month. Although this cities property has 99 or more than it sectors, but few with the main property rates are remarked here-

Tagged as: chandigarh, chandigarh real estate, cities, commercial, country, real estate

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Emaar MGF Palm Hills 3rd Phase in Gurgaon

by Paul Joseph April 30, 2010

3rd Phase of Emaar MGF Palm Hills Gurgaon Emaar MGF is a joint venture between company Emaar Properties PJSC (“Emaar”) of Dubai and MGF Development Limited (“MGF”) of India. After Huge Success of Phase-1 and II Palm Hills in Gurgaon, Group is ready to launch its 3rd Phase of Emaar MGF Palm Hills with same locations. It is an integrated residential township with high security. Also proving exttra home loan oofer for the customer with NO EMI scheme till till 31st Decemeber 2011. It offers you 3/4/5 bhk apartments and all have servant quarter. This project has been designed with the concept of higher efficiency and personalised living spaces. Presenting a refreshing new look at modern living with welcoming green spaces, invigorating fresh air and sunlight, and modern design concepts that complement your sensibilities. Features and Amenities Swimming Pool, Gymnasium, Health Care Centre, Indoor Games Facilities, Tennis Court, Badminton Court, Sandpits, Shopping Complex, 24 x 7 Power Back-up, Children’s play area, Ample Green Area, Gated Complex with Complete Security Emaar MGF Palm Hills Locatated at sec-77, NH-8, Gurgaon.just 20 Min Drive from IGI , Proposed Metro Connectivity and ISBT. Hitesh Murthy ( Sales Representative of Emaar MGF Palm Hills in UK ) www.InvestInNest.com (Indian Property Seller) Email: info@InvestInNest.com UK User:- 020 8090 4217

Tagged as: customer, development, dubai, health, power, sales, swimming-pool

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Finance Ministry Provides Slight Tax Relief to Realtors

by Paul Joseph April 30, 2010

Home buyers could pay less for property following a partial rollback of a budget levy on realtors by finance minister Pranab Mukherjee today. Mukherjee said realtors would pay a 10 per cent service tax on 25 per cent of the value of the built property , including the cost of land, against the budget announcement of the 10 per cent tax on 33 per cent of the value of the property. “I propose to provide the tax relief to this (construction) sector by enhancing their rate of abatement from 67 per cent to 75 per cent of the gross value, where such value includes the value of the land constructed upon,” Mukherjee said. A service tax of 10 per cent had been slapped on real estate complexes for the first time in this year’s budget. The abatement (tax rebate) has been increased to 75 per cent from 67 per cent of the gross value of a property that includes land value. This means that on an apartment, which costs Rs 20 lakh, a buyer can get a service tax relief of Rs 16,000, or Rs 800 for every lakh paid. Buyers would earlier have ended up paying Rs 66,000 as service tax, but now they would pay Rs 50,000. Mukherjee said urban development minister Jaipal Reddy had urged him to scrap the levy. Reddy had written to the finance minister earlier this month seeking a review, arguing that the new tax will hit home buyers rather than dip into the pockets of realtors. The housing market, hit by a slowdown in the Indian economy that saw prices coming down by up to 30 per cent last year, is now reviving. However, realtors are not exactly celebrating the partial tax rollback. Kumar Gera, chairman of the Confederation of Real Estate Developers’ Associations of India said, “The idea of service tax on real estate is unjust. When stamp duty is paid, why should the land value be added upon while calculating service tax. The land is not a service… construction could be.” Navin Raheja of Raheja Developers said, “This (the tax) would have marginal impact in deciding home purchase. It is unfortunate that land value is being added upon to calculate the service tax.” Mukherjee also exempted from service tax constructions under the Jawaharlal Nehru Urban Renewal Mission and Rajiv Awas Yojana. The finance minister, however, did not roll back the hikes in excise and customs duties on petrol and diesel. He said the government had to look at ways of meeting the Rs 85,000 crore expected revenue losses from selling fuels at low prices. The 2010-11 general budget had provided considerable relief to income tax payers but hiked the central excise duty on non-petroleum products across the board to 10 per cent from 8 per cent and the basic duty on crude and petroleum products, besides effecting a one-rupee increase per litre on petrol and diesel. The opposition NDA and the Left parties staged a walkout in protest against the government’s decision not to roll back fuel duty hike before the Lok Sabha passed the Finance Bill 2010. The government has set up an empowered group of ministers (eGom) to decide on the Kirit Parikh panel recommendation of freeing petrol and diesel prices from government control, and a decision is likely soon after the Parliament session ends on May 7. The eGoM will be headed by Mukherjee and its decisions would not be required to be approved by the cabinet. Mukherjee also cut the basic customs duty on stainless steel to 2.5 per cent from 5 per cent and the excise duty on hand-rolled cigars to 10 per cent. He proposed investment-linked tax breaks for hospitals with at least 100-bed capacity. Export duty on iron ore lumps is now 15 per cent against 10 per cent earlier, while the surcharge on raw cotton exports has gone up. Duty on paper made from waste is now down to 4 per cent against 8 per cent earlier. The duty changes would cost the finance ministry Rs 400 crore, officials said. It’s traditional for finance ministers to announce tax changes in reply to the debate on budget. This is done to address anomalies in taxes or on representation by industry or consumer bodies, which complain that high taxes would hurt them. Mukherjee also announced a Rs 241 crore relief package for coffee growers by way of waiving three-fourth of loans taken prior to 2002, especially by small farmers, while restructuring repayments for the rest. On the corporate front, Mukherjee announced tax exemption on the transfer of shares by shareholders in case a company converts itself to the limited liability partnership structure, the new kind of business entity introduced a year ago. In education, the minister extended service tax exemption to vocational courses provided by the training institutes registered under the skill development scheme of the labour ministry.

Tagged as: confederation, delhi, finance, government, gurgaon, india, indian, real estate, real estate india, urban

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Noida extension hunger strike from Saturday

by Paul Joseph April 30, 2010

Noida land acquisition Resistance Movement under the Saturday extension is going to be re-introduced tension. Here Farmers will sit on hunger strike since Saturday. Before farmers Rural Development Minister Pradeep Jain on Thursday met with visiting Delhi. New law soon to acquire land by farmers to make them appeal. Inadequate compensation to farmers while increasing said. Congress leaders, led by Virender Guddu land acquired resistance movement leaders in Delhi on Thursday met with Rural Development Minister Pradeep Jain. Pradeep Jain, Mamata Banerjee agreed to farmers promised by the new legislation will be acquired. Meanwhile, the land acquisition compensation Resistance Movement Convener Bhati Sardaram stating dissatisfaction expressed at the increase. Builders said that the farmers’ land is being sold at Rs one crore 70 lakh. He will not be compensated at Rs 2500 per square meter.

Tagged as: noida property, thursday

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2.5% Hike Expected in Housing Prices

by Paul Joseph April 30, 2010

Real estate industry on Thursday hailed the concession announced by the government on service tax but said housing cost will still go up by about 2.5 per cent. However, the developers were disappointed that their demand to exclude land cost while calculating the service tax was not met. In his reply to the Lok Sabha, finance minister Pranab Mukherjee on Thursday offered tax relief on the construction of real estate complex, which has been brought under ambit of service tax, by increasing the rate of abatement from 67 per cent to 75 per cent of the gross value, including the land value. “It’s a good relief for small buyers,” DLF group executive director Rajeev Talwar said. He, however, said the industry was asking for more concessions, mainly exclusion of land cost from the service tax component. CREDAI, the apex realtors body, chairman Kumar Gera said “its unjust because the abatement which is meant to cover land cost is not fair”. Gera said land cost should have been excluded from the service tax. He said the property prices would increase by about 2.5 per cent as the tax is always payable by consumers. Parsvnath Developers chairman Pradeep Jain also thanked the finance minister for the relief and hoped that the government will consider excluding land cost at a later stage. Omaxe Chairman Rohtas Goel also expressed similar views saying it would have been better if land cost would have been excluded from the ambit of service tax. “Reduction of abatement to 75 per cent will reduce slight burden on customer, but still buyer has to pay extra 2.57 per cent approximately,” Raheja Developers managing director Naveen Raheja said. With on Thursday’s announcement, service tax of 10 per cent will be levied on 25 per cent of the gross sale value of property compared to 33 per cent proposed in the budget in February this year. This means property prices would rise by about 2.5 per cent.

Tagged as: chairman, construction, developers, finance, government, per-cent, thursday

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Two Fold Rise in Sobha Developers Q4 Profit

by Paul Joseph April 30, 2010

Real estate developer Sobha Developers’ revenues have more than doubled during the fourth quarter of the financial year 2009-10 on the back of improved sales. Revenues for the quarter stood at Rs 403 crore as against Rs 163.5 crore for the corresponding period of last year. Net profit for the quarter was Rs 55.7 crore (Rs 7 crore). The board of directors has also recommended a dividend of Rs 2.5/share. “This has been a good quarter not only for our real estate business, but also contractual business as revenues from contracts amounts to Rs 95 crore. “While our margins for the real estate business is over 35 per cent, it is over 15 per cent for our contractual business,” said J C Sharma, managing director, Sobha Developers. The company has sold over six lakh sq ft this quarter. For the financial year 2009-10, the company’s revenues stood at Rs 1,118.5 crore (Rs 990.5 crore), while net profit was Rs 136.7 crore (Rs 109.7 crore), up 25 per cent. “We are back to the good growth figures that we saw till 2007. The slowdown has made us a better company,” he said. The company hopes to clock over 3 million sq ft of new sales in the current year, he added. What has also contributed to the company’s balance sheet is a leaner organisation. The company’s staff cost has come to Rs 76.8 crore (Rs 100.9 crore). “During the recession, we rationalised and downsized considerably. But we have now started increasing our employee strength,” said Sharma. He added that the company has also started providing salary hikes to employees from January this year, and “we have also restored the cut-backs in salary,” he said.

Tagged as: delhi, real, real estate developers

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More Bookings Expected in 2010- Unitech

by Paul Joseph April 29, 2010

Real estate company Unitech Ltd said on Tuesday it has sold 16.6 million square feet of residential and commercial space during financial year ended March 2010. This is more than five times the bookings clinched in FY09 (three million square feet), when slowdown in the property market and cash crunch faced by various builders had dented the fortunes of the industry. Unitech had reported 10 million sq ft of bookings during FY08. The average realisation stood at Rs 4,237 a sq ft for FY10 although the company did not give a comparable figure for the previous year. During FY10, Delhi NCR and Chennai accounted for a big chunk of the total bookings. According to an operational update by the company, for the year ended March 31, 2010, bulk of the area booked by the company pertains to residential projects (82 per cent) and balance to non-residential or commercial space. The company has claimed that the total value of sales for the space booked in the last fiscal stands at over Rs 7,000 crore. On the delivery status of past projects — a pain point with buyers during the market slowdown phase — Unitech has reported that out of the total 22.4 msf of area to be delivered, close to 6.8 million sq ft has been delivered till March 2010. About 1.15 million sq ft was delivered in the last quarter alone.

Tagged as: delhi, industry, real estate, real estate india, total

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UAE Realty Major to Launch Integrated Mega Township Projects In India

by Paul Joseph April 29, 2010

UAE-based realty major Rakeen has announced plans to launch integrated mega township projects in India, it was revealed to Property Pulse. In an exclusive interview with Property Pulse on the sidelines of just concluded Realty Plus Conclave 2010 held in the Capital, Dr. Khater Massaad, Executive Chairman, Rakeen and CEO, RAK Investment Authority (RAKIA) said that India has become the most attractive destination as there is a huge demand for real estate projects . “Moreover, the country enjoys an excellent relationship with the Emirate,” he added. Rakindo Developers Pvt Ltd, a joint venture between Rakeen and Chennai-based Trimex Group, is currently engaged in completing its first integrated township project in Coimbatore in Tamil Nadu. “The date for booking for this project will be announced in June,” informed Dr. Massaad. According to Prasad R Koneru, MD, Rakindo Developers Pvt Ltd, Rakindo is developing Kumarakom Wetlands in Kumarakom, Kerala and Chennai Marina in Tamil Nadu. “The 1000-acre Kovai Hills township project in Coimbatore will also feature a luxury resort and a spa. Besides offering luxury living options under this project, the company is also creating affordable housing just alongside the main project,” added Koneru. Rakeen is also involved in projects like infrastructure and ports development in India. Meanwhile, the much talked about Al Marjan project, a cluster of five coral-shaped man-made islands spread over 2.7 million sq mt off the coast of Ral Al Khaimah — is being developed in the emirate. The project comprises waterfront homes, floating villas, hotels, resorts, sporting facilities and commercial areas. The company’s other projects include Bab Al Bahr, RAK Financial City, Gateway City, RAK Convention Centre, Banyan Tree Al Wadi Resort and Jabal Al Jais, among others. Rakeen also has projects in countries like the Congo, Georgia, Lebanon and Kyrgystan.

Tagged as: delhi, gurgaon, investment, project, real estate

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