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| [04
Nov 08] :: World
credit Crisis Stalls Mumbai real estate
market |
Hopes
of recovery for Mumbai’s property investment
market are freezing thanks to the world financial
crisis, experts have said. The Times of India
reports rents in the Indian city are down by about
10 per cent across the board, according to some
consultants.
Developers are also facing the
prospect of slashing their asking prices for new
homes for sale as the local market continues to
falter. Mumbai has a bigger supply of high-end
apartments and other homes compared to many other
Indian cities, prompting fears it may have an
oversupply of luxury residences.
Few
developers have launched official price cut
schemes but many have begun negotiating with some
buyers over smaller prices, according to reports.
However, Mumbai has already seen sales of
commercial property as developers look to wash
their hands of them completely rather than rent
them. |
| [04
Nov 08] :: China
and India Emerge as Top Property Investment
Zones |
Opportunities
in Asian real estate over the medium and long term
are so good that US investment bank Merrill Lynch
has raised $2.65 billion of equity to invest in
property in the region. It is the latest of a
series of groups to announce that they are pumping
billions of dollars into the Asian markets with
China and India the top targets as both countries
are experiencing a sharp fall in property prices
and sales and developers are looking for foreign
partners to complete projects.
Merrill
Lynch, which has been struggling with tight credit
markets and is now being rescued by Bank of
America, said it sees the creation of its Asian
Real Estate Opportunity fund as a natural
extension of its business. It has raised the money
from investors, including pension funds,
endowments, foundations and private individuals,
in North America, Europe, the Middle East and
Asia. ‘We see exceptional opportunities in Asian
real estate over the medium and longer term,’
said Tim Grady, managing director and head of
Merrill Lynch Pacific Rim Global Commercial Real
Estate.
The fund will invest across the
property sectors as well as in property companies.
It will prioritise investments in Japan, China,
South Korea and India. It will also buy in
Australia and Southeast Asia. Merrill’s fund is
among the biggest to be raised for Asian property
this year, though slightly smaller than a $3
billion fund announced by LaSalle Investment
Management in August and a $3.9 billion fund
raised by MGPA, a company partly owned by
Macquarie Bank.
As stocks continue to fall
some investors are now suffering the
‘denominator effect,’ in which percentage
allocations to non-equity asset classes, including
property, tend to rise too high. The result is
that some investors are expected to sell real
estate, putting more assets on the market.
Property fund managers are eager to invest in Asia
now because they believe that developers,
especially in China and India, will offer plum
deals because they are starved of
financing.
Citigroup is raising a
multibillion-dollar follow-up to a $1.3 billion
Asia fund, which it has been investing mostly in
China and India. And JPMorgan Chase plans to
invest more than $1 billion in Asian real estate
over the next three years. |
| [04
Nov 08] :: Real
Estate Gurgaon winesses Incredible
Boom |
The
Real estate market of Gurgaon has shown incredible
boom in the period between 1998 and 2008, a period
in which the city pioneered real estate developers
like DLF.Having property in Gurgaon is beneficial
in respect to prices, rental income and security.
The prices of residential as well as commercial
real estate has been increased at a fast pace.
It’s been over 60 years, since the DLF Group has
been providing us its exceptional real estate
services. DLF has over 224 million sq.ft. of
existing development and 748 million sq. ft. of
planned projects. The company is thoroughly
committed to quality, trust and customer
sensitivity, and delivers on promises with
agility, financial prudence and in tune with the
highest global standards. Not only this, the real
estate major has also entered into various
strategic alliances with global industry
leaders.
Nowadays, the trend of having
elite dwelling has increased the demand of real
estate in Gurgaon. For accomplishing the
increasing demand of Gurgaon properties, a number
of real estate developers have come with some new
high end projects for middle and upper class
people at Dlf Phase Gurgaon.
Real
Estate/Plots Gurgaon is best opportunity for
property, It is located close to Delhi and is
emerging one of the hottest destination as far as
for real estate is concerned. Gurgaon can be the
best choice for buy residential property,
commercial property, plots property. There are
many ongoing projects. DLF has launched a new
residential/plots project in DLF Phase 1 to phase
5.Besides modern offices and expensive houses,
Gurgaon is also very popular for its residential
properties for middle class people. Nowadays, a
lot of constructions are ongoing keeping in mind
requirements of middle class segment.
Due
to easy accessibly from South Delhi, the city has
become world’s finest real state destination
either for Indian or investors from abroad. With
the connectivity from international airport gives
Gurgaon special attention over other cities in the
NCR. Gurgaon Real Estate has become first choice
among investors as the quality construction and
innovative additions. The real estates in Gurgaon
offer lucrative profit for investors who are
investing money either for commercial or
residential properties. The city is renowned as a
one of the finest choices for investment in
India. |
| [04
Nov 08] :: BIEC,
CII and DMAG to hold real estate
exhibitions |
BuildArch
2008 and BuildUp 2008 is set to have a grand
opening in Bangalore with its inauguration with
Shri Jaipal Reddy, Hon’ble Minister of Urban
Development, Govt. of India delivering the
inaugural address and Shri B S Yediyurappa,
Hon’ble Chief Minister of Karnataka delivering
the key note address. Addressing a press
conference here today, Mr. J. P. Nayak, Chairman -
BuildArch 2008 and President (Operations) - Larsen
& Toubro Limited said,“ The absence of a
quality global platform in India for local players
to know and see for themselves what is currently
cutting edge in the world of building materials,
construction technology and architecture has
finally been addressed. With the forum now
available, one will see a flow of new technologies
and ideas flowing into the Indian market which is
healthy for the industry in the long run. We are
happy to bring BuildArch to you and hope the
audience and the industry finds it of value.”
Speaking to media, Mr. Irfan Razack, Chairman -
BuildUp 2008 and Chairman and Managing Director,
Prestige Projects Private Limited said, “While
there have been real estate industry events there
has been none on this scale, breadth and focus.
The decision to make it concurrent with BuildArch
increases the combined value to an industry player
or our target audience and we welcome the industry
to utilize the platform to share knowledge and
find better ways to learn from each other and
collaborate. This is very important in the current
industry context as well.”
BuildArch will
have a global conference on the theme of
“Buildings of the future” which will focus on
what next in construction and architecture besides
green buildings. BuildUp will have a conference on
the theme - “Indian realty gearing ahead”
covering topics like emergence of real estate
funds, real estate development etc. There will be
a CEO conclave also as part of this conference
which is expected to attract the cream of the
industry and see participation of some of the
biggest names in the space. There will be free
entry into Bangalore International Exhibition
Centre for business visitors to the exhibition.
There will also be to and fro bus shuttle service
to the International airport, Vijayanagar,
Yeshwanthpur, Majestic, Mysore road satellite bus
station, Jayanagar & KR Market. There are user
friendly pre-exhibition registration facilities,
including online registration, a visitor helpdesk,
an exclusive protocol lounge for VIP visitors and
an exclusive media lounge equipped with
internet-ready workstations for media
representatives. |
| [04
Nov 08] :: Red
Fort Capital To Invest 3200 Cr In
Realty |
Private
equity (PE) firm Red Fort Capital will be
investing Rs 3,200 crore by the next year to cash
in on the liquidity crunch in the Indian real
estate sector. The firm will pick up an average 50
per cent stake each in 10-12 projects located in
equal number of cities, including the National
Capital Region, Mumbai, Bangalore, Kolkata,
Chennai, Pune and Hyderabad. These projects will
primarily comprise residential, office spaces,
budget hotels and warehousing and logistics
spaces
“Since the financial crisis
started last month, the number of proposals to us
has increased by over 50 per cent; some of them
are well-established, big developers,” Red Fort
Capital Director Kuldip Chawlla said. “As more
lending curbs are in place, we have lots of
opportunities now. We are in the process of
closing a number of transactions in many cities.
We are currently talking to about 10 developers in
these cities,” Chawlla added. The company would
invest in affordable housing projects only, he
said. “We are looking for both IT and non-IT
office spaces. We are also planning to invest in
about 4-8 budget hotels in tier-I and tier-II
cities,” he said |
| [04
Nov 08] :: HC
defers decision on scrapping of notified
SEZs |
The
Goa bench of the Bombay High Court postponed its
verdict on the state government’s move to scrap
three notified special economic zones (SEZs). The
State government’s had decided to revoke
sanctions given to three SEZs, K Raheja
Corporation, Meditab Specialties and Peninsula
Land would be decided only after a month.
Observing that it did not have all necessary
documents for taking a final decision, the HC
granted time up to November 17 for all parties to
respond. “We have filed affidavits, now the
other party has to respond to our submission,”
said Mihir Desai, advocate for SEZ Virodh Manch
(SVM), which is spearheading campaign against
SEZs. The company representatives refused to
react.
SVM, an umbrella of anti-SEZ
organisations, has filed a public interest
litigation (PIL) against the Goa State Industrial
Development Corporation for making allegedly
fraudulent deals with real estate majors. This is
being heard before the high court along with other
cases challenging the state government’s move to
scrap approved economic zones. According to Mr
Desai, ‘affected parties’ like K Raheja are
yet to respond to the government’s affidavit,
thereby making it impossible for the high court to
take a decision.
The issue of developing
SEZs in Goa is being debated for more than a year
now. Having axed by the state government, the
three SEZs, along with other promoted by Paradigm
Logistics and Distribution, Planetview Mercantile
Company and Inox Mercantile, challenged the
government’s move. Their contention is that an
SEZ, once approved, cannot be rolled back; hence
the government’s decision to scrap the projects
was unlawful. So, even while the matter is still
pending before the HC, efforts are on for an
out-of-court settlement. The government is toying
with an option that offers alternative land to
developers for setting up industrial projects out
of the purview of SEZs. Chief minister Digambar
Kamat is likely to hold separate meetings with
petitioners in the coming
week. |
| [04
Nov 08] :: Lord
of the land: State bets on a realty
cheque |
It’s
an initiative that could lead to a facelift for
Malabar Hill, Mumbai’s toniest address, as well
as Nariman Point and other areas in South Mumbai.
The city collector has proposed to free
government-owned land, which is currently locked
in lease agreements, by selling it at market
rates.
However, a section of the state
administration feels that conditions in the realty
market may upset the government’s dreams of
generating several thousand crores of rupees by
selling these properties. The Maharashtra
government is sitting on vast tracts of land in
one of the most expensive real estate markets in
the country. These properties, in many cases, have
become a liability for the state, since it earns
paltry revenue from them. Most of these properties
are locked in lease agreements.
“We earn
around Rs 20 crore from 955 land leases in Cuffe
Parade and Churchgate and Rs 25 crore from Backbay
Reclamation and Nariman Point. Most of these lease
agreements are over. Instead of renewing them, we
would want the government to consider outright
sale of these properties,” Mumbai district
collector IA Kundan told ET.
Of the 955
land lease agreements in Cuffe Parade, Churchgate
and Marine Drive, 458 agreements ended long ago.
In the Backbay area, where the business district
of Nariman Point is located, more than half of the
316 lease agreements have expired. Some of these
agreements were signed for 99 years. “The rent
the state government receives from these
properties is ridiculously low,” Ms Kundan
said.
The Maharashtra government had, in
1999, proposed to free itself from these lease
agreements, but its plan to sell the properties
landed in court. Now the issue has been settled,
and the revenue ministry has asked the city
collector to put up a formal proposal to sell the
leased properties. “Accordingly, we have
submitted our plan. This will now be discussed by
the state cabinet,” she said.
Top
government sources ET spoke to overwhelmingly
supported the idea, but feared that the slowdown
in the real estate market may block its execution.
“It makes sense for the government to make the
best of its real estate. But the timing certainly
is an issue,” an official said. “We will have
to wait till things begin to look
bright.”
Senior officials at Mantralaya
are also concerned about the likely political
fallout. “Government land sale is invariably
followed by allegations of kickbacks and
favouritism. We can hardly afford them when
Assembly elections are hardly a year away,” said
a high-ranking state government
functionary. |
| [04
Nov 08] :: Real
Estate India Trembles in Market
Quake |
It
has been a year of steep decline for the real
estate sector in India. It remains one of the
worst hit by the domestic credit squeeze and the
global financial meltdown. To an extent, the
problem is reflected on the BSE Realty Index,
which is now down 82% from its January peak. High
inflation and the resultant credit tightening had
a crippling effect on the sector. When inflation
touched double digits in June this year, the
realty index fell by 65% in that month alone. Last
Friday, the index closed at 2524.89 points, from
its January 8 high of 13848.09. Comparatively, the
Sensex lost only 53% during the
period.
Analysts believe that funding has
become a major issue for the realty sector.
“Banks have tightened liquidity for the real
estate sector. With ECB banned for over a year,
acquiring funds has become really difficult,”
said a Mumbai-based analyst. But Rohtas Goel,
chairman, Omaxe Ltd, is putting up a brave face.
He flatly denies any funding problem for his
projects. “We are funding our projects through
internal accruals and bank loans”, said Goel.
While most companies say banks are delaying loans
even after sanctioning them, Goel says banks have
made full disbursals for Omaxe’s
projects.
Others like Anil Kumar, CEO,
Ansal API, while admitting that funding has become
difficult than before, said, banks are lending to
the sector, though they are taking more time to
disburse the funds. “Bank loans have become more
expensive. It has increased by around 300 basis
points in recent months from around 12% before to
15% now”, said Kumar.
This has dampened
the demand for apartments, forcing realty firms to
put on hold many expansion projects. Both Kumar
and Goel said they are consolidating their
existing projects than thinking of expanding. They
are not buying any land now, though they have no
plans to sell off their existing land banks.
Kumar, however, said that he was getting offers
from smaller developers to buy out their land.
Ansal API is also ensuring that there are
consumers for the projects it is
developing.
An analyst aptly pointed out,
“Even if firms try to sell out their land banks,
where is the buyer?” He added in the present
scenario source of funding for the realty sector
is rapidly drying up. Funding from private equity
firms has become scarce and expensive because of
the global financial meltdown. |
| [04
Nov 08] :: India’s
Real Estate Goes into Meltdown |
The
new moon of the lunar month of Kartika marks
Diwali, the Indian festival of lights, when Hindus
across the country worship the goddess of wealth,
Lakshmi. But divinities know full well the laws
that govern finance and Lakshmi may not be a
little tight-fisted about circulating her riches
amid the ongoing global credit
crunch.
Indian tradition decrees that it is
auspicious to make purchases during the days
leading up to Diwali — which falls in October or
November. With faith meshing so effortlessly with
commerce, the season sees sellers, advertisers and
marketers urging the devout to spend money with a
religious fervor, hawking everything from
chocolates and consumer durables to gold and
houses. Buying a home is considered especially
propitious. What better way to welcome the goddess
of wealth into one’s life than by inviting
Lakshmi into one’s new abode? So much so that
the period from just before Diwali through March
is usually a bonanza for the real estate industry:
usually 70% of the annual business is conducted at
this time.
Not this year. With just about a
week to go until Diwali, the mood is decidedly
downbeat. The demon of impending economic doom
refuses to die, and as tightened liquidity makes
people put off larger purchases, the real estate
sector is facing the worst attack. Considered the
barometer of economic growth, the real estate
sector in India has grown 30% to 35% during the
last five years, reflecting the rapidly-increasing
demand for office, commercial and industrial
space, as well as bigger homes now considered
within the range of India’s prospering working
classes. But the economic juggernaut has been
slowing since earlier this year due to
double-digit inflation, a severe liquidity crunch
as a fallout of the U.S. sub-prime crisis, and
now, the possibility of economic activity
shrinking as part of a global slowdown.
The
country’s growth estimates of 9% at the
beginning of the year have been revised to well
below 7%, and the effect is directly visible on
the realty sector. There are no takers for flats
selling at 20% markdowns. Estate agents are
finding it difficult to even meet daily
overheads.
Yet, no one is entirely
pessimistic. Experts and industry insiders believe
once the storm blows over, demand is bound to rise
back up for the same reasons it did last time —
a large, young workforce; gradual but consistent
liberalization reforms; and a high rate of
consumer and private sector savings. “The silver
lining is that once this phase ends, land and
property prices will be corrected to rational
levels, speculators will be out, and the sector
will have stronger fundamentals,” says Shukla.
If everyone’s prayers go right, the goddess will
eventually be propitiated and her blessings will
issue forth once more. |
| [04
Nov 08] :: Home
prices about to fall in Jan-March |
Potential
home buyers who have been deferring their purchase
decisions, may have to wait till April-May to get
a good deal. The ripples of the ongoing financial
crunch, coupled with mounting pressure from
various other circles, will peak between January
and March. That’s when many developers will be
forced to sell the unsold stock at a much cheap
price, feel industry experts.
“The
signals are very much visible. Developers are
already offering lots of freebies. I feel, they
will hold on to prices till the end of the festive
season. If sales are not happening in the current
quarter, the Jan-March quarter will see a price
crash in some pockets, and in the first quarter of
the next fiscal, developers will be forced to sell
homes at a much lower rate as their loan repaying
capacity will be under challenge,” said Anuj
Puri, chairman & country head of Jones Lang
Lasalle Meghraj.
He added that in the
current market scenario, if developers want to
bring some cash flow into their company, that will
happen only by selling their residential and
commercial properties. “All other routes are
drying up,” he said. India’s property market
has been among the hardest hit by the global
financial turmoil as high interest rates and
gloomy economic prospects have driven out buyers
and squeezed funds for real estate
developers.
Through this year, property
prices have already declined more than 10-20%,
though in cities like Mumbai and Delhi, prices are
still too high for a middle class consumer.
Developers like Orbit Corporation has already cut
prices by 20% from Rs 26,000 to Rs 21,000 at Parel
in Mumbai. Broking firm Edelweiss Securities in
its recent report on real estate said property
prices are likely to decline by 10% in the current
calendar and another 15% by the end of the current
financial year. |
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