opinion

Loan Rates Increases, Home Prices Tends to Increase

by Paul Joseph June 17, 2011 Uncategorized

NEW DELHI / MUMBAI : A 25 basis point rise in key interest rates by the RBI on Thursday is likely to further squeeze home sales across the country, some developers and bankers said in the midst of increase in bank rates. Customers will now have to reconsider the size and locations of houses they wish to purchase and many buyers are expected to put off their purchases altogether till home prices come down and rates stabilise. This is certainly bad news for existing home loan consumers as banks will certainly increase home loan rates. Purchasing capacity had already gone down visibly during the last tranche of interest rate hikes, and we will see a further reduction in buyer interest. Owing to the last 10 rate hikes by RBI, EMIs for housing loans have risen 25 percent to INR980 per INR 1 lakh of borrowing, and consequently loan eligibility for homebuyers has declined by 20percent. Anil Kothuri, head of retail lending business at Edelweiss Group says, “Housing finance companies have no wriggle room available.” For new home loan seekers, this will be big warning, not just because of the rate hike but also because of the frequency of the rate hike by RBI. “The person who is looking to  purchase a home has the option, of buying or not buying. Existing home loan customers are stuck. However, of the opinion of Renu Sud Karnad, Managing Director of HDFC, is that this quarter percentage hike will not impact housing demand and loan off-take.

Tagged as: altogether-till, country, edelweiss-group, frequency, further-squeeze, loan-consumers, opinion, property news, purchases, rate, retail-lending

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India The combination of real estate tiers

by Paul Joseph March 9, 2011 Uncategorized

A international real estate consulting firm forecasts in the subsequently five years, five Tier III cities are arranged to come out as main IT outsourcing hubs, off-shoring / mostly owing to greater cost benefits, and in spite of upper comfort levels suggested by Tier I and II cities. In the opinion of critics ” India property is one of the worthwhile budding real estate markets and proffers massive scope in IT/ITeS segments together with the retail segment, utmost expansion opportunities in promising cities lie in commercial property in India management”. Labour and capital cost improvements, state governments taking quantifies to foster a sympathetic business situation, improvements in basic infrastructure amenities are some of the aspects providing beautiful investment promise in Tier II and III cities Long-lasting cost forces in Tier I Bangalore, Mumbai, Delhi property and Tier II indicates Chennai, Hyderabad, Pune has generated a development in infrastructure and commercial property in Tier III Chandigarh, Nagpur, Ahmedabad, Kolkata. Of these, Chandigarh and Ahmedabad propose best cost gains whilst Kolkata has the major accessibility of Grade-A office space urbanized by Tier I city developers, Unitech and DLF, who have place up actions in the east. With multi-nationals growing and location up back-processing units in slighter cities, the BPO boom has started to reach Tier II and III cities. And, a 300-million middle class offering momentum to the country’s financial system, developers are challenging classifying chief real estate to rotate into quality housing, enlarge retail, leisure and affection these, Chandigarh and Ahmedabad offer best cost increases whilst Kolkata has the key accessibility of Grade-A office space prolonged by Tier I city developers, DLF and Unitech, who have associated works in the east. Thus you can see India real estate properties is the great combination of 1, 2 3 tier cities.

Tagged as: budding real estate, chandigarh, city-developers, cost-increases, delhi property, india, office-space, opinion, quality-housing, real estate, retail, slighter-cities, subsequently, worthwhile

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Land deals worth Rs 400 cr in 20 days

by Paul Joseph December 9, 2010 Uncategorized

Western Ahmedabad’s real estate market has witnessed land deals to the tune of Rs 400 crore in just 20 days. Most of these deals are being grabbed by ‘hi-end’ residential schemes. The size of the plots sold range from 1,700 sq yard to 3 lakh sq yard. According to industry sources, one of the major deals is said to have been bagged for a 11,000 sq yard plot near Vivekanand chowk. The land is believed to have been sold for between Rs 80 crore and Rs 88 crore. The Jade Blue group also sold off their 26,000 sq feet building on S G Highway for a whopping Rs 18 crore. However, the current owners of both the plots — Babubhai Desai, owner of 11,000 sq yd plot beside Vivekanand chowk and CMD of Jade Blue Group Jitendra Chauhan — said the paper work is in process and therefore it is difficult to comment. Sources say, the other big plots that are likely to be sold off are an 8,000 sq yard plot in Law Garden area, a 38,000 sq yard plot in Sanand, a 11,500 sq yard plot near Vaishno Devi temple, Paneetar party plot in Thaltej and a plot next to Shalby Hospital on SG Highway. Several more small and medium-sized plots are up for sale, they said. These include plots for both residential and commercial projects. SCHEMES NOT FOR MIDDLE-INCOME Their sale is expected to begin towards the end of the current financial year. However, the since the plots are being sold at higher rates, realty experts are of the opinion that developers are planning hi-end projects and not affordable schemes for the middle-income segment. Subhash Shrimali of Metro City Home, a real estate consultancy, said: “We have recently witnessed land deals in the western part of the city as well as on the outskirts. At Sanand and SG Highway, people are buying land for affordable residential schemes. Reason being, the land deals taking place inside the city are pretty lucrative. Therefore, to come with affordable schemes, developers are buying land on the outskirts where it is available for anywhere between Rs 1,500 per sq ft to Rs 2,700 per sq ft.” The per sq feet rates of residential schemes in Ahmedabad city vary from Rs 2,200 to Rs 5,500, depending on the location, said the experts. Looking at the disparity in the land deals, Vijay Shah, a realty expert and chairman of real estate committee in Gujarat Chamber of Commerce and Industry (GCCI) told Mirror: “The real estate market is giving a mixed response. Investors from outside Gujarat (both NRIs and NRGs including people from other states) are pumping in money to secure land. They believe that there is bright future for real estate in the long run in Ahmedabad. However, the overpriced market is also foreseeing slight correction in the residential segmen

Tagged as: city, current, garden, industry, location, opinion, outskirts

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Booked flat in Bopal? Now, pay more

by Paul Joseph August 27, 2010 Uncategorized

Get ready to pay more for the flat you booked in Bopal. The urban development department of the government of Gujarat has decided to levy extra charges on realtors operating in Bopal, particularly south Bopal. Now, real estate players will have to pay for getting extra 0.6 FSI (floor space index) and they are going to pass on the additional cost to the customers.  Some 17 real estate developers had launched residential schemes in south Bopal, which falls under town planning (TP) scheme No. 3 prepared by the Ahmedabad Urban Development Authority (AUDA).AUDA’sdraft scheme of TP-II and TP-III covered a majority area of Bopal as residential zone-I (R-I) allowing the realtors to build high-rise buildings. However, the urban development department changed AUDA’s plan and declared TP-II and TP-III as R-II in April 2010. This made builders and customers, who had already booked their flats, anxious.  Having received suggestions and objections from all the stakeholders, UDD finally declared TP-III as R-I zone along with TP-I and TP-II as R-II zone. However, it levied additional charges of 40% of jantri rate for offering 0.6 additional FSI in TP-III. So the builders will have to shell out more money to get final approval for their high-rise building plans and building usage permission for their schemes. The realtors will naturally pass on the additional cost to the customers. However, this cost will vary according to saleable area of the scheme.  The realtors are of the opinion that there will not be much increase in the property rates for the customers who have already booked their flats. The increase in the price will be in the range of Rs20 to Rs50 per sq foot depending upon plot size and total marketable area. Uday Vora, managing director of HN Safal, said that the additional cost will not be around Rs20 per sq ft in Safa Parisar taking into consideration plot size and saleable area in our scheme.   “We do not think customers will object to paying a little more,” said Vora. Although customers may not be willing to pay more, they will not have any other option as they would not be able to afford to get their booking cancelled as property prices have gone up sharply in the past few years.  “If the customers will not pay additional money, the developers will return their original amount and seek other properties that may not be viable for them,” said sources.  As the government has declared TP-II as R-II zone, the future of four schemes in this area is uncertain. Various realtors have planned and even started construction work of four high-rise residential apartment schemes in TP-II of Bopal. If the developers return money to the customers who have already booked their flats, the latter will lose interest as well as they will have to pay higher prices for new property compared to what they have already booked.  Source: http://www.dnaindia.com/money/report_booked-flat-in-bopal-now-pay-more_1428419 Filed under: Builders/ Developers , New projects Tagged: FSI , Real Estate in Bhopal

Tagged as: flats, fsi, opinion, scheme, source, stakeholders

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Residential Buildings in Navi Mumbai to get extra FSI

by Paul Joseph August 11, 2010

The Navi Mumbai Municipal Corporation ( NMMC) got  State’s approval for changing the  D C rules in July 2008. The division bench of Chief Justice Mohit Shah and Justice S C Dharmadhikari vacated a stay on the matter by granting an additional FSI of 0.5 % to the residential buildings in the city. But this rule is not applicable for the plots allotted by CIDCO which do not have 15 m wide roads adjoining them. The developers however of the opinion that min. 2.5% FSI should be granted for the area in order to have a right kind of development in the city. Source:http://www.accommodationtimes.com/real-estate-news/residential-buildings-in-navi-mumbai-to-get-extra-fsi/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+AccommodationTimes+%28Accommodation+Times%29 Filed under: Builders/ Developers , Navi Mumbai Tagged: FSI , Navi Mumbai , Residential Buildings

Tagged as: builders/ developers, city, developers, fsi, matter, mumbai, opinion, the-residential

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Certain Regulation of the Proposed Real Estate Bill can Hit Project and Buyers – Realtors Claim

by Paul Joseph July 23, 2010

Even as the real estate sector has welcomed the proposed Model Real Estate (Regulation of Development) Bill, developers feel some of the provisions in the Bill, such as the five-percent bank guarantee on project cost, several new advances and reserve funds, will not only block the capital of the developers but also limit the project size. They also claim multiplicity of procedures in the Bill will further delay the project timing up to six months. The Bill provides strict monitoring of timelines during the execution of the projects putting various penal implications on the promoters. “One of the prime objectives of the Bill is to remove malpractices and fly-by-night developers. “However, there are certain provisions proposed which may defeat the very purpose for which the Act has been proposed,” Rohtash Goel, chairman and managing director, Omaxe Ltd, said. On Friday, the Confederation of Real Estate Developers’ Associations of India (Credai) had said the Bill in its current form would make homes costly for buyers by Rs 300 per sq. ft. “The proposed model real estate regulation is a welcome step on the part of government. However, there are many provisions in the bill which will add to the housing cost,” Kumar Gera, president, Credai, the apex body of realty developers in India, said. According to Goel, “The proposed act in its present form will add costs and delays to the lifecycle of the project. In our opinion simplifying the approval procedures, facilitation, regulation, control and growth of real estate development and safeguarding interest of all stakeholders should be its objectives.” Credai has suggested that there should be collaboration and proper accountability of all concerned authorities so that the complete transaction is efficient and transparent. Apart from that, the Bill has no provisions to control errant buyers and it does not speak about the accountability of local authorities that causes unnecessary delays, said the apex body of realty developers. “Ultimately, it is the end-users who would be affected as we will pass on the cost escalation to the buyers,” Gera said. “The government has already burdened the buyers with the service tax and increase in the circle rate and on the top of that this new Bill is set to make housing unaffordable for the end-users. Also the affordable housing segment will be the worst hit,” he added. The Bill provides strict monitoring of timelines during the execution of the projects putting various penal implications on the promoters. But developers feel that it has nowhere taken into account the time taken by the government agencies in clearing the projects. According to Ashwani Prakash, executive director, Paramount Group, “This regulatory Bill provides validity for three years for the licence to be issued by the regulator, whereas the government agencies as mentioned earlier take 18 to 24 months in clearing various approvals. More so when different states have different criteria for clearing projects and granting licensees, such type of sections within the Bill are to be diluted.” Developers have already submitted its paper to the ministry for housing and urban poverty alleviation on cost impact of major provisions in the proposed Bill. It has also requested the ministry to modify certain portions of the Bill, which will help buyers and developers. Source: http://www.indianrealtynews.com Filed under: Legal questions Tagged: Real estate in india

Tagged as: developers, development, government, housing, india, legal-questions, ministry, opinion, project, promoters, real estate

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Certain Regulation of the Proposed Real Estate Bill can Hit Project and Buyers- Realtors Claim

by Paul Joseph July 20, 2010

Even as the real estate sector has welcomed the proposed Model Real Estate (Regulation of Development) Bill, developers feel some of the provisions in the Bill, such as the five-per-cent bank guarantee on project cost, several new advances and reserve funds, will not only block the capital of the developers but also limit the project size. They also claim multiplicity of procedures in the Bill will further delay the project timing up to six months. The Bill provides strict monitoring of timelines during the execution of the projects putting various penal implications on the promoters. “One of the prime objectives of the Bill is to remove malpractices and fly-by-night developers. “However, there are certain provisions proposed which may defeat the very purpose for which the Act has been proposed,” Rohtash Goel, chairman and managing director, Omaxe Ltd, said. On Friday, the Confederation of Real Estate Developers’ Associations of India (Credai) had said the Bill in its current form would make homes costly for buyers by Rs 300 per sq. ft. “The proposed model real estate regulation is a welcome step on the part of government. However, there are many provisions in the bill which will add to the housing cost,” Kumar Gera, president, Credai, the apex body of realty developers in India, said. According to Goel, “The proposed act in its present form will add costs and delays to the lifecycle of the project. In our opinion simplifying the approval procedures, facilitation, regulation, control and growth of real estate development and safeguarding interest of all stakeholders should be its objectives.” Credai has suggested that there should be collaboration and proper accountability of all concerned authorities so that the complete transaction is efficient and transparent. Apart from that, the Bill has no provisions to control errant buyers and it does not speak about the accountability of local authorities that causes unnecessary delays, said the apex body of realty developers. “Ultimately, it is the end- users who would be affected as we will pass on the cost escalation to the buyers,” Gera said. “The government has already burdened the buyers with the service tax and increase in the circle rate and on the top of that this new Bill is set to make housing unaffordable for the end-users. Also the affordable housing segment will be the worst hit,” he added. The Bill provides strict monitoring of timelines during the execution of the projects putting various penal implications on the promoters. But developers feel that it has nowhere taken into account the time taken by the government agencies in clearing the projects. According to Ashwani Prakash, executive director, Paramount Group, “This regulatory Bill provides validity for three years for the licence to be issued by the regulator, whereas the government agencies as mentioned earlier take 18 to 24 months in clearing various approvals. More so when different states have different criteria for clearing projects and granting licensees, such type of sections within the Bill are to be diluted.” Developers have already submitted its paper to the ministry for housing and urban poverty alleviation on cost impact of major provisions in the proposed Bill. It has also requested the ministry to modify certain portions of the Bill, which will help buyers and developers.

Tagged as: confederation, development, india, opinion, projects, promoters, proposed, real estate, real estate companies, real estate developers, real estate trends

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Defaults by listed companies may be disclosed

by Paul Joseph June 13, 2010

A committee comprising senior government officials and financial regulators has proposed mandatory disclosure of loan defaults by listed companies, a move aimed at protecting shareholders’ interest and boosting investor’s confidence. The proposal was discussed at the May 24 meeting of the High-Level Coordination Committee on Financial Markets, said a senior finance ministry official. Market regulator Securities & Exchange Board of India (Sebi) will examine the practical aspects of the proposal. “Sebi may consider making changes in the listing norms so that whenever a company defaults on any payment obligation, it would trigger a public announcement,” the official said, requesting anonymity. The meeting of the coordination committee was chaired by Reserve Bank of India (RBI) governor D Subbarao. Finance secretary Ashok Chawla, department of financial services secretary R Gopalan, chief economic advisor Kaushik Basu, Sebi chairman CB Bhave, Insurance Regulatory & Development Authority (IRDA) chairman J Hari Narayan and senior officials of the Pension Fund Regulatory & Development Authority (PFRDA) attended the meeting. At present, information on loan defaults is available only to the lenders, RBI and credit information companies such as CIBIL. As per the current practice, banks disclose a list of defaulters to RBI on a quarterly basis. A copy of this report is forwarded to Sebi and CIBIL. Globally, there were a number of corporate loan defaults in 2009, after some of the world’s largest economies were hit by the worst financial crisis since 1930s. India also felt the tremors of the crisis, leading to a few high-profile default cases. Several companies in the worst-hit sectors such as retail and real estate had a tough time servicing their loans. Institutional lender IDBI recalled a loan to a private airline recently after it failed to meet its repayment obligations. Industry officials and policymakers are of the opinion that disclosure on loan defaults will promote transparency and strengthen corporate governance. “Sebi should not have any problem. There are already laws in place making it mandatory for promoters to disclose information about shares pledged,” a finance ministry official said. Under the current laws, a company will have to disclose on a quarterly basis if its promoters have pledged shares amounting to 1% or more of the company’s capital. When promoters fail to repay, lenders dump their shares to recover their dues. Retail investors suffer in this whole process as they do not have access to information. A section of industry officials and market analysts fear that such disclosures may lead to panic in the capital market. “There needs to be clarity on the definition of default. Missing a monthly payment is also default, but putting that information out in public will be disastrous both for the lender and the corporate as it may create unnecessary panic,” said an RBI official. If a company fails to repay the loan, the banks give a window of 90 days. Failure to make repayments in this period results in the loan being classified as a bad loan or non-performing asset (NPA). Sharing such information with public is unnecessary and in some cases this would lead to witch-hunting, said Abizer Diwanji, head (financial services) at consultancy firm KPMG. “In my view, flow of such sensitive information should be restricted amongst regulators,” he said. Such information will be open to interpretation and may adversely affect corporate houses, he said. “If there were any chances of recovery, even that may dry up,” he said.

Tagged as: current, definition, delhi, exchange-board, financial, gurgaon, opinion, real estate india

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India Real estate bubble 2010

by Paul Joseph May 22, 2010

Delhi is known for its record-setting architectural talent and is a tourist hotspot, attracting thousands of visitors every year. This capital city of India has been in the spotlight since many years. With its tourism industry, India real estate sector has experienced boom in it’s economy as well as crashing of the sector. ~ Some critics have termed India has a “ India Real estate bubble” which grew in its time, which could not sustain itself for long. Things may seem hazy at this point in time, however Delhi property sector can be looked into with several aspects of thought. Property in Delhi is not the only hindrance it has seen in its economy, but, there are several other factors which added to the troubles. One of the most persistent issues was the regularization of laws for the stake holders. Although Delhi has been blamed by some people to create a hype of its economy because of greed and speculation, however, there is a different opinion that may conflict this. Delhi’s economy was compared to some of the largest economies in the world which fell due to different reasons. Delhi slipping into crisis wasn’t due to lack of funds, but the incompetency of market control due to improper regulations and laws. But, being more optimistic, Delhi took over all its challenges and has been trying to overcome every factor. Even though Delhi property prices are seeing challenging times, but it hasn’t hit the bottom mark as compared to several real estate markets around the world. Also, several people expressed their opinion and said Delhi only has tourism and real estate sector to rely upon, however, the irony is Delhi initially grew on its oil sector, which has been forgotten with time. Though, later the entire economy didn’t survive on it completely. Being one of the largest re-exporting economies of the world, Delhi is the exporting hub to the world to its west and east. In terms of its real estate sector. Some of the world’s largest companies in the world, like Microsoft and IBM, have their offices in Internet City of Delhi/NCR. Delhi has still maintained its tax-free status, where several other countries have been levying heavy taxes on people. There are several new universities which have come up during the crunch and several others are looking forward. Where everywhere in the world banks have ceased their lending facilities.

Tagged as: countries, delhi, internet, largest, lending, opinion, world

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A Discussion on Trends In Real Estate.

by Paul Joseph May 7, 2010

An interactive discussion on Real Estate titled ‘Real Estate: Trends, Issues & Consequences’ was organized by Money life Foundation on May 5. The session was jointly conducted by industry experts like Pranay Vakil, Chairman of Knight Frank (India) Pvt Ltd and Pankaj Kapoor, MD, Liases Foras. Mr. Pranay Vakil said on the occasion, “One of the major reasons why the prices are high today is infrastructure. Nobody wants to travel long distances for work. Title insurance is another major issue in this industry.” Photo by Northfield.org He added on being quizzed about the short recession, “Liquidity is vital. Developers realized this when sales volumes declined drastically due to the liquidity crunch. The slowdown gave customers ample choice as affordable housing came into the industry in a big way. Investors are ‘fair-weather friends’, Sell ‘ready’ products during a slowdown; contracts can be broken; healthy growth can be sustained by a gradual increase in prices; high-value transactions hyped by the media are not the ‘real’ market and the need is to innovate sales strategy.” Mr. Kapoor said, “Are we heading towards another asset bubble? Are the prices affordable? What is wrong with the valuation and where is affordable housing? The government is responsible for hiking prices. We need a regulator for this industry to grow and curb wrong practices.” The workshop witnessed enthusiastic participation from several investors, research analysts and industry experts in form of healthy exchange of ideas between them. Ms Kavita Hurry, CEO, ING Vysya Mutual Fund asked the speakers to highlight three major issues in the sector. On which Mr. Vakil said “Three most important things we need in real-estate as a priority are—rental housing, all over the world there is organized rental housing. Here you are left at the mercy of the broker who does not know anything. Secondly, infrastructure— the government cannot be a provider, it can be a facilitator. Thirdly, all these need funds, so get foreign parties excited about India.” Mr. Kapoor said, “We need to address the congestion issue in the island city. If we move five buildings from the island city to Bandra, there will be a whole shift in the crowd. If we can shift Mantralaya, BSE or the Income-Tax office, there will be a difference. There are three-four magnets which draw the crowd there. Everyone knows about it but there is no intension to do that because they are sitting in luxurious places. We need to add more connectivity. We need a complete master plan for Mumbai to reduce the congestion. We need a regulator, and urban planning.” Other industry experts also voiced their opinion. The audience reached to a consensus which was that there is an immediate need for a citizen action forum to make higher authorities listen.

Tagged as: affordable housing, knight-frank, money, opinion

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