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Center can’t Intervene in Greater Noida Land Acquisition Matter: Kapil Sibal

by Paul Joseph July 23, 2011

Human resource development minister and senior Congress leader, Kapil Sibal, said on Friday that the Centre had no powers to intervene in the problems arising out of land acquisition in Greater Noida, but it was up to the Uttar Pradesh government to come up with a “fair” solution. “Land is a State subject. We have no jurisdiction over that. It is obviously a problem and in fact if you look at scams across the country, most of them are centred around land and wealth around land,” Sibal told reporters at a press conference. Builders and home buyers were hit hard by a Supreme Court order earlier this month, quashing the acquisition of 156 hectares in the Shahberi village. Farmers alleged that the land was acquired by Greater Noida Industrial Development Authority in the garb of using it for industrialisation but was the sold to developers at exorbitant rates. In another case involving land in the Greater Noida region, the Allahabad High Court sided with farmers, quashing land acquisition of 598 hectares in Patwari village. “This is a result because land was allotted as the High Court says without reference to rules, procedure, any law. This is the consequence and people have to suffer… so it is up to the UP government to evolve a solution which in the circumstances is fair, just and equitable,” said Sibal. “We can deal with corruption as a Central subject but we can’t deal with the issue of land. We can deal with the corruption that arises out of dealing with land, but we cannot deal with re-distribution of land,” he added.

Tagged as: acquisition, consequence, corruption, country, greater, greater-noida, gurgaon, real estate, real estate developers, real estate india, shahberi, supreme-court

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Domestic PE Funds Emerging as Preferred Investment Option for HNI’s

by Paul Joseph July 20, 2011

Domestic private equity funds in the real estate space are emerging as a preferred investment option for high net-worth individuals and family offices in the country. Over the last few years, money from institutional investors that was part of such funds has dried up. Banks have been directed by the central bank to reduce their exposure to real estate. “In such a scenario, HNIs are investing with fund houses as these offer better yield to the investors,” says Sandeep Kotak , executive vice president and business head for commercial real estate at Kotak Mahindra Bank . As a portfolio, capital market offers an 8% return while HNIs can get a return of 18-22% from domestic funds investing in real estate. In the last one-year a number of players including Ask Investment Advisors, Kotak Realty Fund, Milestone Capital Advisors and Aditya Birla Real Estate Fund have raised domestic private equity funds from HNIs. ICICI Venture and Indiareit have announced that they will raise money from HNIs. For HNI’s investing in a fund is an opportunity to diversify both location and developer risk and participate in real estate across the country. “This has emerged as an alternative investment class,” says Sutapa Banerjee , chief executive officer, private wealth at Ambit Capital . For an HNI , investing in a fund means he is investing in a basket of properties, he does not have to do a due diligence on the physical property and is free of all hassles of registration and stamp duty, she adds. The only due diligence that is required is which fund to invest in-one that invests for capital appreciation, for rental yield, where one gets a steady return or one that invests in part completed projects where the payback period is shorter. “Investing in real estate in India still requires thorough due diligence which an institutional fund manager can do better,” says Sanjeev Dasgupta , president, real estate at ICICI Venture, which is raising a Rs 1,000 crore domestic fund. Apart from the due diligence, a fund manager would also offer tax efficient deal structuring. “A fund does not invest in a property for the price increase. It will access the development margins at today’s price,” says Sunil Rohokale , executive director, Ask Investment Advisors, which has raised two domestic realty funds (Rs 520 crore and Rs 480 crore) in the last few months from HNIs. HNIs of course need to be careful about which fund they are getting into and their past track record. Not many of the funds in the country have shown returns yet. “We offer this product to clients who understand that there is relatively higher risk in real estate and it is a long term play,” says Sonalee Panda , head, wealth management, liability and marketing at ING Vysya Bank . A typical investment in a real estate fund would be for 5-7 years. Dasgupta of ICICI Venture though points out that the kind of investments that funds are making these days, they can start repaying the HNIs after the first year. A number of funds today are investing in projects that are 50-60% complete. Here, investments should get an exit in 2-3 years.

Tagged as: after-the-first, ambit-capital, country, estate-at-icici, india, investment, real estate, real estate trends, sunil-rohokale, sutapa-banerjee

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Mumbai Ranked as the Most Favoured Development Market in Asia Pacific Region

by Paul Joseph July 8, 2011

Mumbai is ranked third as the most promising investment market, and the first as the most favoured development market, in the recent Emerging Trends in Real Estate Asia Pacific 2011, a real estate forecast jointly published by the Urban Land Institute (ULI) and Pricewaterhouse-Coopers (PwC). “Projections for Mumbai in 2011 look good, as the city’s investment ranking rises five spots to third,” the report states, adding that this city is “clearly the best performing and most active real estate market” . Development in Mumbai continues to be an area of interest, with the city ranking first in the 2011 results, up from sec ond in 2010. Oversupply continues to be a serious risk for the area, but respondents “don’t think many people are worried about real estate turning into a bubble again” . “In terms of investment, buying opportunities ‘ring out’ in the retail, apartment and industrial sectors,” the report adds. The report also notes that India’s GDP continues to grow and shows “no real signs of declining anytime soon” . Over the past 30 years, it says, the country has managed to sustain a GDP growth rate average of 10%. Projections for 2011 are 8.5%, and forecasts are for growth of between 9% and 10% by 2015. This is a significant move from the mid-6 % range found in the early 2000s. To support this economic expansion, there has been a large amount of growth in the working population of India. Also, the government continues to make progress in introducing reforms that have helped the country introduce new private equity to capital markets, create a new platform of employment, and inject capital into infrastructure programmes. Exports of both goods and services from this region continue to increase, marking more business interest abroad. Speaking of the region as a whole, the ULI/ PwC report also states that the “cloud has been lifted” from Asia Pacific real estate markets , with the fiscal outlook for most of the Asian countries more promising than that for Europe or the United States. “Many , if not most, Asian economies have rebounded to pre-crisis levels, and real estate markets, although mostly slower, are headed towards some semblance of normalcy,” said ULI Asia Pacific chairman C Y Leung.

Tagged as: asian, banking and finance, city, country, delhi, europe, government, pune, real estate, real estate developers, report, retail

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Indian property market hits a brick wall

by Paul Joseph July 6, 2011 Uncategorized

Two years ago, India’s residential property market provided a lucrative investment opportunity amid a shortage of 26 million housing units across the country. Developers minted profits from top-end condominiums and shiny high-rises that were in big demand as the economy grew rapidly. Building boom: A list of major investments in IndiaPruksa Global plans to invest $218 million in projects

Tagged as: country, global, india, million-housing, minted-profits, property-market, pruksa-global, the-economy

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Gurgaon affordable apartments

by Paul Joseph July 1, 2011 Uncategorized

By way of the increase in the number of companies shifting level to the money-making capital of the country, Gurgaon, the requirement for residential properties has developed exponentially. Loads of people have turned to Gurgaon from other regions of the country and the opening thing they necessitate is a place to stay. Affordable Apartments in Gurgaon are of two varieties: the luxurious villas or the conventional flats. Both these at the moment comes with the most favorable facilities. Seeing the growth on demand and subject to the ferocious competition the builders in Gurgaon are preparating and impending with latest projects in unusual parts of the metropolis. The affordable apartments in Gurgaon appear with the options of 1/2/3 BHK in company with additional services and facilities of round the clock security, complete annual preservation and 24 x 7 power back up amenities. There are quite a few segments of apartments that present the living option of 4 BHK flats together with servant quarters. There are numerous places in Gurgaon real estate property that propose wonderful existing choice for tiny families in 1BHK / 2BHK apartments at localities for instance Sohna Road, Golf Links, MG Road, DLF Phase I, II, IV, Palam Vihar, and Mehrauli. The apartments at these regions are not far from diverse corporate office and houses complexes on top of well-developed market services. The beautiful and profit giving apartments for rent in property in Gurgoan has entitled the awareness of real estate investors. Since Gurgaon’s property market continues to be mounting by leaps and bounds, the rental turnover is liable to appreciate by 10 to 15 % for the next couple of years.

Tagged as: conventional, country, favorable facilities, ferocious, gurgaon, luxurious, money, property in gurgaon, property-market, real estate, requirement, round-the-clock, since-gurgaon, the-requirement

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Demand for Home Loans May Decline: Experts

by Paul Joseph June 29, 2011 Uncategorized

At the peak of the global housing crisis in 2008, a group of executives at State Bank of India (SBI) were busy devising a new home loan scheme meant to boost the sluggish demand. The growth in housing loans had fallen from a high of 31.2 per cent in December 2006 to 4.1 per cent in March 2009. After State bank of India (SBI) launched its special home loan scheme, home loan portfolio of banks in India rose 30 per cent on a year on year basis till September 30 2010, against 20 per cent in 2009-10, according to data from the Reserve Bank of India (RBI). In 2011, as the housing market in the West slowly picks up, the Indian market may be in for slack. SBI withdrew its home loan scheme with effect from May, after RBI raised concerns on the borrowers’ ability to repay them over longer tenures. After a period of sustained growth, bankers expect a moderation in home loan growth in the coming months. Rising interest rates and property prices are once again set to hit demand for home loans, say bankers. The impact of the slowdown is already visible in the priority sector lending portfolio of banks. According to RBI data, the growth in outstanding credit of banks, under priority sector housing loans, halved to 6.80 per cent in April, against 11.90 per cent in the year-ago period. SBI, the country’s largest public sector bank, expects a moderation in the growth in home loans. “We expect a slowdown, a moderation in the home loan market. It has been evident in the last two quarter. It is difficult to estimate the extent of the moderation,” said Diwakar Gupta, managing director and chief financial officer, State Bank of India. Close to 30 per cent of the home loan market in India is currently accounted for by the teaser home loan market, according to Monish Shah, director, Deloitte, India. “The withdrawal of teaser loans would have a marginal negative impact on the demand. After 2009, in the two-to three year period, the home loan growth was mostly seen in the teaser home loan segment. It gained about 20-30 per cent market share, which is an absolutely phenomenal growth,” said Shah. SBI launched the special home loan scheme in 2008, under which it offered an interest rate of 8.5 per cent for a loan of Rs 5 lakh and 9.25 per cent for a loan of Rs 20 lakh, with a reset clause after every five years. The scheme was tweaked several times since then. High interest rates are also expected to play a dampener. “Demand for home loans is likely to be impacted due to high interest rates. The impact would be more visible in the next two months. Both investors and home loan buyers are likely to wait for few months before buying property. In the last one year, the burden of easy monthly installments for borrowers has gone up by 15-20 per cent,” said S L Bansal, executive director, United Bank of India. The slowdown in home loan disbursements is already visible. The home loan growth recorded by United Bank of India till April was about 10-11 per cent on a year-on-year basis, against 12-13 per cent last year. R V Verma, chairman and managing director, National Housing Bank had said there was a slowdown in the growth in housing loans due to rising interest rates and property prices. Smaller banks expect a level-playing field after the exit of teaser home loans from the market. Allured by lower interest rates, several home loan customers had shifted to teaser loans. “Now, we hope our customers will remain with us. Earlier, we saw some customers moving to teaser home loans. “During the first few months, the demand for housing loan is generally low, but for the whole year, we expect a reasonable growth in the home loan portfolio,” said M Narendra, chairman and managing director, Indian Overseas Bank. Rising property prices have also dented the prospects of robust home loan growth. According to realty consultant Cushman & Wakefield, residential property prices in Delhi-national capital region and Mumbai saw prices rise 36 per cent in 2010 on good demand. The trend was reflected in loan disbursements for banks as well. Housing Development Finance Corporation, one of the biggest players in the home loan market, saw fourth-quarter net profit rise 27 per cent rise last year. “In some markets, the outlook on property prices is expected to correct, while the interest rates are high. This could lead to a slowdown,” said Vibha Batra, co head, financial sector ratings, Icra. “A lot of factors would contribute to the slight slowdown in credit off-take. Affordability, interest rates and uncertainty in the real estate market are some of the reasons. So, going forward, there would be a slowdown in the home loan market for sure,” Deloitte’s Shah said.

Tagged as: country, growth, home-loans, housing, india, indian, outlook, property prices, real estate, real estate developers, real estate india, state-bank, united-bank

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Country Club on Expansion Spree: Plans 18 More Properties in 5 Years

by Paul Joseph June 27, 2011

Leisure and infrastructure firm Country Club India has earmarked over Rs 300 crore for expansion activities in next five years and is eyeing one million membership in 10 years. “We are spending Rs 100 crore this FY12 for developing 18 properties, which will be operational by FY 13. After finishing them, we will plan on further expansion both in the country as well as overseas for which we have earmarked over Rs 200 crore till FY16,” Country Club vice-chairman and CEO Y Siddharth Reddy, said. Presently, Country Club India has 50 own properties, out of which 36 are directly-owned and 14 by promoter group. It has 175 franchised establishments and over 4,000 affiliations all over the world through RCI. The company, which has good presence in tier-I cities through its clubs, is focusing on developing properties in tier-II cities. “Tier II cities are growing with good spending power where people are looking at quality and ambiance. Moreover, we are expanding phase by phase. After we establish in Tier-II, we may move to tier-III,” he added. Presently, Country Club has overall 600 rooms which will be increased to 1,000 rooms in next five years, including India as well as overseas. The company has two properties abroad, one in Dubai at a cost of Rs 185 crore and another in Kandy in Sri Lanka. Reddy said the company is in the consolidation phase and after winding up of the ongoing projects, “we will plan the next phase of expansion”. “We will look at increasing our overseas expansion, especially in the Middle East and the South Asian nations, which are our priority growth drivers,” he said. The company’s net sales grew by 31.45 per cent at Rs 92 crore in the quarter ended March 31, compared to Rs 70 crore in the corresponding quarter last fiscal. The revenue for FY11 went up by 7.23 per cent to Rs 321.92 crore from Rs 300.21 crore in FY10. “We expect to witness similar growth in FY12 as we are in consolidation phase,” Reddy added.

Tagged as: country, country-as-well, country-club, gurgaon, lanka-reddy, plan-on-further, pune, real estate developers, real estate india, real estate trends

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Big Realters Moving Towards Small Cities.

by Paul Joseph June 23, 2011 Uncategorized

NEW DELHI: Growing demand for homes in smaller cities of the country is attracting real estate biggies. Cities like Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow , Nagpur, Surat , Vadodara and Visakhapatnam are estimated to add 354 million sq ft of residential development in the coming 03 years. According to a research, large builders like DLF , Unitech , Parsvnath , Omaxe , Ansals and Emaar MGF have already diversified into these cities. These cities today show huge potential for growth. These cities are attracting the big developers because of their considerable price stability and growth prospects. With economic activity picking up in these cities, there is a growing migration from smaller areas, which has created a shift towards an apartment culture . This shift will foster volumes for larger developers in the future. Looking at this new demand, banks and financial institutions are also looking towards these cities to bridge the financial saturation gap.The growth prospects in the smaller cities are fascinating huge developers with multi-city existance.

Tagged as: bhubaneswar, big-developers, coimbatore, considerable, country, financial, foster-volumes, large-builders, looking-towards, price-stability, real estate, shift-towards, smaller-cities, these-cities, visakhapatnam

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Real Estate Biggies Attracted Towards Small Cities for Future Growth

by Paul Joseph June 23, 2011

Growing demand for homes in smaller cities of the country is attracting big national real estate players. Cities like Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow , Nagpur, Surat , Vadodara and Visakhapatnam are expected to add 354 million sq ft of residential development in the next three years. According to a research report by Crisil Research , large builders like DLF , Unitech , Parsvnath , Omaxe , Ansals and Emaar MGF have already diversified into these cities, with an eye on future growth. These cities today show huge potential for growth, with 2011-12 itself expected to generate sales of Rs 18,000 crore. These cities are attracting the big developers because of their considerable price stability and growth prospects. While prices of homes in large metros have seen a huge jump of 25-30% over the last two years, these tier-II cities have seen a moderate price increase of 10-12%. “These markets will offer stable and less volatile options for real estate developers to diversify,” says Prasad Koparkar, head-industry and customised research at Crisil Research. The research, which covered over 500 developers across these cities, pointed out that even if there is a considerable price correction in the larger cities over the next few months, smaller cities will remain stable or at worst see a moderate decline in prices. In fact, the report by Crisil foresees prices rising in seven of the 10 smaller cities it has identified. In contrast, prices are likely to increase only in four of 10 large cities, it says. With economic activity picking up in these cities, there is a growing migration from smaller areas, which has created a shift towards an apartment culture. “This shift will aid volumes for larger developers in the future,” says Koparkar. Looking at this new demand, banks and financial institutions too are looking towards these cities to bridge the financial penetration gap. At the moment, the proportion of buyers taking home loans is relatively lesser in these smaller cities. A gradual increase in penetration of home loans would also boost demand. The growth prospects in the smaller cities are attracting large developers with multi-city presence. “We had foreseen this demand in tier-II cities and are confident about their growth. The economic growth today is not just limited to the metros. Purchasing power, consumption and lifestyle changes have taken place in small cities as well. This cements our strategy of doing developments in tier-II cities,” says Dinesh C Gupta, assistant vice-president (investor relations) at Ansal API. Ansal API has launched projects in Lucknow, Agra, Jaipur, Mohali and other small cities like Sonipat and Panipat. “A majority of our projects today are outside of the metro cities,” he adds. Local developers from these cities too are scaling up, looking at the big demand and new competition. Almost 80-90% of the new supply that is expected to hit these markets will come from these local developers, who understand the market better. Among the top 10 tier II cities, Surat, Bhopal and Jaipur are expected to get 38% of the new homes.

Tagged as: chandigarh, chennai, cities-as-well, country, crisil-research, foresees-prices, gurgaon, jaipur, prasad-koparkar, real estate, smaller-cities

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Fund Hit Realtors Selling Land Banks to Complete Projects

by Paul Joseph June 20, 2011

Sluggish sales, poor performance of the stock on the bourses and difficulty in raising money from banks and private equity (PE) players are forcing many real estate developers to turn to sell their land banks to raise funds to complete their projects. “A lot of real estate credit is lying unused by the banks and the banks are extremely cautious and selective in lending money to real estate players,” Naveen Raheja, chairman and managing director (CMD), Raheja Developers, said. “Few players, who have good credibility and track records in terms of repayment of loans and overall past experience, are only being lent money by the banks,” Raheja added. As banks remain reluctant to lend to the realty sector large companies like DLF, Emaar MGF, Omaxe and HDIL, among others, that have huge debt portfolios are turning to sell their land banks to reduce their debt and raise money for their pending projects. DLF, the country’s largest developer, sold land worth Rs 403 crore in Pune, Amritsar and New Gurgaon in the third quarter of 2010-11. It is planning to sell 12 million sq ft this fiscal to raise about Rs 7,000 crore. DLF said it will continue to sell land assets to raise money. DLF, in its annual presentation, had already indicated that going forward the company would focus on launching plots than group housing as it helps generate faster cash flows. DLF needs to repay Rs 2,700 crore debt this fiscal and has net debt of Rs 21,424 crore. The company said that of the planned launch of 12 million sq ft sales this fiscal, 10 million will be plotted development in cities like Indore, Gurgaon, Chandigarh and Lucknow. The rest will be group housing projects.

Tagged as: banks, bourses, country, group-housing, helps-generate, hyderabad, launching-plots, mumbai, noida

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