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| SVP Group and Ashiana Homes Come Together to Make Luxury Villas in Gaziabad |
The two Delhi NCR based real estate developers SVP Group and Ashiana Homes have come together to introduce mega luxury housing project Villa Anandam on the Meerut Road, NH-58, Ghaziabad. The 198 villas will be constructed in 12 acres of land and are expected to be ready for possession by mid-2012. The total cost of this residential project will be Rs 150 crore.
Villa Anandam is well connected by rail and road as well as with other fully developed infrastructural facilities around it such as schools, hospitals and educational institutions. In the first phase, Villa Anandam will offer 125 independent luxurious four bedrooms duplex villas on 140 sq yard, 146 sq yard and 178 sq yard with a built-up area of 1,810 sq ft starting at Rs 75 lakh.
Vijay Jindal, chairman and managing director, SVP Group, said, “In the last couple of years, this location has witnessed unprecedented growth, emerging as one of most coveted destination. Villa Anandam goes much beyond quality construction, making a definitive statement in opulence and luxury.”
“Luxury residential market was never out of the scene. It was always around, the only hindrance was the people’s unwillingness to buy property because of economic reasons. But now things are getting back on track. Our this mega residential project is on NH-58, Ghaziabad ( NCR )” he added. |
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| Brigade Enterprises Seeks shareholders’ Approval to Raise Rs 750 crore of Additional Funding |
Bangalore-based real estate company, Brigade Enterprises has sought shareholders’ approval to raise Rs 750 crore of additional funding. The money will be raised through various instruments such as global depository receipts (GDRs), American depository receipts (ADRs), foreign currency convertible bonds (FCCBs) or via placement with qualified institutional investors.
In a note to shareholders, ahead of the annual general meeting on July 23, the company said, “The money will be used to fund the construction cost of ongoing and new residential projects, acquisition of land, repayment of debts, augmentation of working capital, investment opportunities and for other general corporate purposes.” “We will take resolution of Rs 750 crore but will only raise around Rs 350-400 crore in the first tranche,” said R J Shama Sunder, general manager, finance, Brigade Enterprises.
The Banglore based realty firm, which primarily focuses on development of residential units in South India, is also seeking shareholder approval to list its stock on the London, Singapore, Luxembourg and New York Stock Exchanges. “We have an option of looking to raise money from the international market by listing the company on foreign stock exchanges,” said Sunder.
Shareholders will be called upon to approve the appointment of KR Srinivas Murthy as one of the directors of the company. Murthy is currently on the boards of CMC, National Stock Exchange of India and Himatsingka Seide. |
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| Reverse mortgage unlocks property’s potential |
Ashish Gupta explains how this concept helps property owners get a regular income without having to surrender possession
Reverse mortgage is a financial product that enables senior citizens (60 years plus) to mortgage their real estate assets with a lender and convert part of the equity into tax-free regular income. This saves them from selling assets in their lifetime.
The Life Insurance Corporation (LIC) is planning to enter the reverse mortgage business. LIC's entry in this segment is significant as the life insurer has a huge base. According to the Insurance Regulatory Development Authority's (IRDA) annual report, LIC has a 29 percent share in the total new life insurance policies sold in 2008-09.
The National Housing Bank's (NHB) reverse mortgage loan-enabled annuity scheme has sanctioned 40 loans estimated at Rs 100 crores. The scheme, without the life-long payment benefit, was launched in 2007. According to the NHB, around 7,000 loans amounting to around Rs 1,400 crores have been sanctioned till March 31, 2010. It is expected that the modified scheme that provides life-long annuity to the buyer and his spouse will catch on with the entry of LIC in the segment.
With the existing scheme, LIC will provide payments in the form of annuity to policyholders. Once the assessed value of the house and the loan amount to be disbursed is decided on, LIC will start making payments till the policyholder survives. The bank will make full payment of the total loan amount to the LIC once the policy starts which the insurer can invest as per the company's investment guidelines.
In case of a reverse mortgage, the property owner surrenders the title of the property to a financial institution. The financial institution doesn't pay the entire amount to the owner upfront. On the contrary, it pays out a regular sum each month for the agreed time. The owner gets to stay in the property along with his spouse for their lifetime. Thus, the owner can ensure a regular cash flow in times of need and enjoy the benefit of staying in the property. After the owner's death, the property is transferred to the institution, and not to the heirs.
Reverse mortgage is a relatively new concept in India. The concept is quite popular in developed countries to generate cash flows.
The aim is to make immovable property more liquid and generate returns out of the asset while it is used by the owner. The amount paid out each month is for a specific period of time. The monthly payout depends on the value of the property, the term of the agreement and the rate of payment. The valuation of the property is to be done by professionals. The entire payout mechanism - calculation and computation - depends on the law of probability.
The financing institution has to bear the risk of the individual outliving the agreement. At the expiry of the agreement period, the monthly payments to the owner stops.
Reverse mortgage is of immense use in unlocking the otherwise illiquid asset. Till now, immovable property has been treated as one of the most illiquid assets. Reverse mortgage unlocks the liquidity potential of this asset. It helps the owner get good returns from his immovable property, without having to part with it. The owner can continue with the possession of the property during his lifetime.
A NOVEL CONCEPT
Reverse mortgage is a relatively new concept in India
It is a financial product that enables senior citizens to get tax-free regular income
The concept is meant to unlock the income potential of a property
A significant aspect of this concept is the owner retains possession through his lifetime
It makes property as an investment option work better, especially for risk-averse senior citizens
It is a popular income-generating product in the West
The monthly payout depends on the value of property
The financing institution bears the risk of the individual outliving the agreement
Courtesy by: Times Property Dtd: July 3, 2010 |
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| Maintenance of rented property |
The issue of maintenance of rented premises depends a lot on the terms and conditions agreed upon between the parties and laid down in the lease agreement. The Rent Control Acts of various States also provide some guidance on this. According to these Acts, the landlord has a duty to keep the premises in good condition.
Every landlord is bound to keep the premises in good and tenantable repairs. If the landlord neglects or fails to undertake any repairs which he is bound to undertake, within a reasonable time after notice in writing, the tenant may undertake the repairs himself and deduct the expenses on such repairs from the rent to recover them from the landlord. This is subject to the condition that the amount so deducted or recoverable in any year does not exceed one-twelfth of the rent payable by the tenant for that year.
It is the responsibility of the landlord to ensure that the tenanted premises are habitable and safe. If need be, he should ensure that adequate repairs are undertaken to ensure this. In case the landlord is unable to do so or is unwilling to do so, the tenant may undertake these repairs. He needs to give proper notice to the landlord about this, specifically mentioning the nature of problems, the nature of inconvenience caused, the nature of safety hazards, and the necessary steps required to correct the problem. Moreover, it should be specifically mentioned that in case the landlord fails to undertake the repairs within the specified time, the tenant will have them done and will be eligible to recover the amount spent from the landlord.
However, it should be noted that this would cover only repairs which are essential and urgent. It would not cover circumstances wherein the tenant wants some alterations or additions for his convenience. The essential test is if the repairs are needed to keep the premises safe, habitable and usable.
In case any repairs are to be undertaken, without which the premises are not habitable or usable except with undue inconvenience, and the landlord neglects or fails to undertake them after notice in writing, the tenant may apply to the controller under the Rent Acts for permission to undertake the repairs himself. He may submit to the controller an estimate of the costs of such repairs. If any repairs not covered by the amount are necessary in the opinion of the controller, and the tenant agrees to bear the excess cost himself, the controller may permit the tenant to undertake the repairs.
Courtesy by: Times Property Dtd: July 3, 2010 |
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| ORDER HC comes to rescue of general power of
attorney holders |
Spelling relief to lakhs of people who bought
flats in various apartments on gener- al power of attorney (GPA), the Delhi High
Court on Tuesday directed the Delhi Government to immediately implement the
provisions of Delhi Apartment Ownership Act, 1986 .
Sincere implementation of the provisions will effectively free GPA-holders, who
bought their houses in resale, from the clutches of brokers, builders, promoters
and land mafia and protect their rights.
These include formation of their own association, mem- bership at par with
original allottees and voting rights and right to fix maintenance.
The order by a Bench of jus- tices A.K. Sikri and Ajit Bharihoke came on a PIL
filed by lawyer O.S. Bajpai, who said vested interests, including bro- kers and
land mafia, continued to retain hold on various apart- ment complexes because
the government failed to implement , d the Act passed 20 years ago.
The court asked the govern- f ment to appoint competent - area-wise authorities
within a l month for effective implemen- d tation of the Act.
Directing the competent - authorities to inform the own- t ers of the apartments
about d their right to form owners' asso- d ciation in accordance with the -
Act, the court said such an asso- d ciation shall take over the man- - agement
and books of account e and other documents from the t builders and promoters
courtesy Hindustan Times - Jun 1, 2010 |
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| Gurgaon to develop nine new sectors |
New Delhi: The Haryana government has decided to
develop six new residential sectors and three new commercial sectors in Gurgaon
to meet the growing demand for housing and commercial space. These sectors — 58
to 65 and 65 to 67 — will be developed over an area of 850.10 acres. A senior
government official said that the state government has started acquiring land in
eight villages around Gurgaon.
The villages are Medawas, Tigda, Behrampur, Ulvaas, Badhshahpur, Nangali
Umarpur, Ghata and Kadarpur. ‘‘After the acquisition of the land, the new
sectors would be developed,’’ he said. The 2021 development plan of
Gurgaon-Manesar urban complex envisages doubling of the number of residential
sectors in Gurgaon to accommodate more people.
‘‘We want to avoid a situation like Delhi, where residential flats and complexes
are used for commercial purposes owing to lack of space,” said an HUDA official.
courtesy Times of India - Jun 1, 2010 |
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| DLF to launch Mumbai’s largest luxury housing project soon one of the largest parking lots in the city. The apartments are likely to be in the Rs 5-10 crore range each, with the minimum size being 2,000 sq ft, property consultants said. |
DLF has sounded out major property brokers and consultants. Though brokers say the company is likely to launch in the next one-and-a-half months, company executives maintain the launch is a few months away. “We are in no hurry. With markets improving, we hope to get good pricing for the project,” said Executive Director Rajeev Talwar.
According to consultants, the company is banking on higher floor space index (FSI), the amount of construction allowed on a plot of land) granted for parking lot and hand that over to the government for public use. So, you can build four square feet. Normally, developers get an FSI of 3.25, due to restrictions from the fire department police and so on. For those without a parking lot, the FSI is capped at 1.33.
Given an FSI of 3.25, the 17-acre project is expected to have total development of 4-5 million sq ft, including the parking lot (an acre equals 43,560 sq ft), consultants said.
Office boom on ex-mills land The Worli-Lower Parel belt in central Mumbai, a former hub of textile mills, is witnessing modern office developments by realtors such as individuals.
DLF made news in 2005 when it bought a 17-acre Mumbai Textiles Mills land - lot from National Textiles Corporation (NTC) for Rs 702 crore. The company had then said it would build a ‘futuristic-retail-cum-entertainment complex’ on the plot.
Earlier this year, the company changed its plans to build a high-end mall project to a high-end premium residential project, as demand for retail space came down sharply. According to a consultant, the project plans were changed several times as the real estate markets went through ups and down during the past five years. At one point, the company was also planning to build an office-cum-hotel complex on the plot.
“Considering it is a large project, it has to be superior and offer better pricing, as it is three years away from completion,” said Sanjay Dutt, chief executive at Jones Lang LaSalle Meghraj, a property consultant.
According to Anand Narayanan, national director, residential agency, of Knight Frank India, central Mumbai is expected to see around 7,000 premium housing units in the Rs 4.5-crore bracket in the next eight-odd months. “None of them are coming at attractive prices and efficient sizes, even if land prices allow them to do so,” he said.
“There is a appetite in the sub-Rs 4 crore segment and supply in that segment is being absorbed. But, the market cannot absorb the kind of supply coming up in million-dollar homes (those above Rs 4.5 crore),” he adds.
Courtesy: BS Dtd 26th May 2010 |
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| India's biggest land deal in Mumbai |
A 25,000-sq-m plot in Wadala has attracted a sky-piercing bid of Rs 4,053 crore to the Mumbai Metropolitan Region Development Authority (MMRDA), the offer coming after a two-year slump in the realty market.
The winning bidder, Lodha Crown Buildmart Pvt Ltd, has quoted a price of Rs 81,818 per sq m of the permissible built-up area on the plot, which the MMRDA had earlier earmarked for an iconic tower.
If the deal goes through, it will be the country's highest land transaction ever. The Delhi-based BPTP had quoted Rs 5,006 crore for a 95-acre plot put up for sale by the Noida Authority, but the deal soon fell through.
With the payment model allowed for the Wadala plot -five years at 10 per cent compound interest is the total amount that the developer will shell out works out to a staggering Rs 5,700 crore.
The aggressive bid by Lodha group comes ahead of the launch of its initial public offering (IPO). The deal is unprecedented in terms not only of the price offered but also of floor space index (FSI) is a whopping 19.8 is .offered on the plot against the standard of 1.33.
"This is an iconic bid for us. The price offered works out to more than double the MMRDA's reserve price of Rs 40,000 per square metre," said MMRDA additional commissioner S V R Srinivas.
He added the aggressive bidding is justified in view of the expected boost to connectivity in the area. "Both the monorail and the Eastern freeway, which will make the area more accessible, will be commissioned next year. After that, Wadala will be a hot cake for real estate," said Srinivas.
Rolling back its plans to build a 101-storey iconic tower, the MMRDA decided a few months ago to sell the plot to private developers who could then build a tower. Granting further leeway, the MMRDA soon said the winning developer was free to build multiple smaller structures instead of a sole tall tower.
The FSI boost entitles the developer to a total built-up area of 5 million sq ft. Taking the super-built-up area into account, the final saleable component will go up to as high as 8 million sq ft, which will translate into an astronomical profit.
Lodha Group director Abhishek Lodha said the company plans to build a residential project on the plot. "We haven't yet drawn up plans as to whether the project will have a single tall tower or several structures but we plan to launch the project at Rs 13,000 per sq ft," said Lodha.
The existing residential rates at Wadala are around Rs 8,500 per sq ft, which could be hiked after the deal. Over the last few months, Ajmera Developers have increased their rates at the Bhakti Park project to Rs 13,000 a sq ft. Real estate sources, however, say they have been unable to sell flats at the increased rates
Courtesy yahoo news dtd:26/05/2010 |
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| Property registration fee hiked after 45 years |
| New Delhi: Delhi cabinet on Monday gave nod to a proposal to significantly increase the registration fee of property in the city. The revision comes after a gap of 45 years.
Officials said a rationalization was long overdue given the ridiculously low rates of filing of appeals and fee for registering wills, gift deeds etc. The revision is expected to increase revenue collection from Rs 1.5 crore per year to Rs 100 crore.
As per the new rates, fee for registering conveyance deed, sale deed, gift deed etc relating to immovable properties will be 1% of the stated value or the circle rate whichever is higher up to a fee of Rs 50,000. Where the value of the property is not mentioned, the fee will be Rs 1,000. Earlier the fees was just Rs 100 for both categories.
The fee has also been revised from Rs 100 to Rs 1,000 for registration of lease of an immovable property and from Rs 100 to Rs 500 for registration of wills. Miscellaneous registration of documents will now cost Rs 1,000 per document.
Officials said the rock-bottom rates had meant that despite the flurry of registration, government collection was very low. In 1007-08, 291469 documents were registered which generated a revenue of around Rs 1.48 crore. In 2008-09, Rs 1.40 crore was earned from registration of 284203 documents while in 2009-10 the earning from registration of 2,74,466 document was around Rs 1.31 crore.
The most dramatic revision has happened for fee relating to filing of various appeals. In this case, the fee has been revised to Rs 100 from Re 1 in some cases and Rs 10 in others. For inspection or search, the fee now stands at Rs 100 from the earlier Re 1.50. Copies of registered documents will now come at Rs 10 per page instead of the earlier 25-75p per page. Attending registrations at private residences in case of the infirm or in jail for the incarcerated will now be charged Rs 500 instead of Rs 10. In all other cases where a Rs 20 fee was charged, now Rs 200 will be charged.
Filing for translation will now cost Rs 50 instead of Rs 2. Authentication of a power of attorney for which fee was Rs 3 earlier, will now cost Rs 1,000. Rs 10 will be charged now instead of Rs 10 for deposit/withdrawal/opening of the will. Safe custody of documents after registration will cost Rs 50 per week instead of Re 1 per week.
Courtesy:- Times of india dtd:- 18-may-2010 |
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| DLF to sell Aman Resorts |
DLF on Monday confirmed it had decided to sell its stake in ultra-luxury hotel group Aman Resorts as part of its planned exit from the hospitality business, but a sale would exclude Aman’s New Delhi property.
THEcountry’s top real estate company DLF confirmed on Monday it had decided to sell its stake in ultra-luxury hotel group Aman Resorts as part of its planned exit from the hospitality business, but a sale would exclude Aman’s New Delhi property.
DLF CFO Ashok Tyagi told analysts that that the company was looking at potential investors for Aman, which has 23 hotels across 12 countries patronised by the super-rich. This portfolio includes the Aman Lodhi, a 68-room hotel which was commissioned in 2009. DLF hopes the sale of its 97% stake in Aman will help it pay down debt, which now stands at Rs 14,821 crore following the consolidation of liabilities of DLF Asset Ltd.
DLF bought its 97% stake in Aman in 2007 for $400 million. It is hoping to raise Rs 2,000 crore from the sale, which is being managed by Goldman Sachs. Aman’s founder Adrian Zecha owns the remaining 3% stake. DLF did not say why it planned to retain the Aman Lodhi and what it would do with it after the sale, but its exclusion is unlikely to matter much to potential buyers, most of whom would be mainly attracted by its resort properties. The Aman Lodhi is the group’s first and only city property. DLF has also dropped its plan to sell the wind energy business. The group has plans to cut its debt by Rs 5,000 crore, more than half of which — Rs 2,700 crore – will be from the sale of non-core assets and refunds from various government authorities in the next 12-18 months.
Courtesy:- Economics time dtd:- 18-may-2010 |
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Office to Home, Realty Touches Sky in Mumbai, Bangalore
Suburban office bldg sells for Rs 407 crore |
| Mumbai: In what is touted as the largest commercial transaction of 2010 in Mumbai suburbs, a brand new office building at Kalina has been sold for Rs 407 crore. Market sources said the deal was signed sometime last week.
The buyer, Edelweiss Broking Ltd, is believed to have paid around Rs 20,000 per sq foot for over two lakh sq ft space in the 14-storey building, Lotus Midtown, located outside the Bandra-Kurla Complex. The building has been constructed by Anand Pandit of the Lotus Group.
A real estate analyst said demand for commercial properties was once again picking up. However, he said it is mainly coming from Indian companies rather than multinationals as was the case earlier.
Last February, a four-storey commercial building at Worli was sold for Rs 640 crore, one of the costliest of its kind in the country. The Wadia Group sold its property to Axis Bank, which is planning to shift its headquarters to the building. The building, Wadia Tower A, located on Bombay Dyeing Mill compound on Pandurang Budhakar Road, has a saleable area of over 4 lakh square feet. It worked out to Rs 16,000 per sq. foot. |
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| Mallya’s luxury flats to be priced at Rs 20 Cr. |
| It’s official now. Liquor and aviation baron Vijay Mallya is uncorking a Rs 1,500 crore-luxury residential play in the heart of Bangalore on Vittal Mallya Road, along with Prestige Estates. This could well be the most expensive residential project to be sold in Bangalore’s real estate history, as the asking rate per sq ft is pegged at a whopping Rs 33,000. Mallya plans to develop 75 apartments over 5- lakh sq. ft.
Mallya is razing down his ancestral home spread across approximately 4 acres of land and is situated adjacent to the UB City to construct a 31 storey high -rise super luxury residential building likely ot be called ‘Residences at UB City’. TOI though has learnt that the project would have 75 super luxury apartments of 6,000 sq ft to 7,000 sq ft in size sporting price tags anywhere between Rs 15 crore and Rs 20 crore apiece.
What is now known is that as part of the project, Mallya is building a 70,000 sq ft to 80,000 sq ft penthouse for himself, which will be the only home in Bangalore to have a bird’s eye view of Cubbon Park, MG Road, Vidhana Soudha, and the entire central business of the city. Also, at 31 storeys high, it could well be the only house in Bangalore that can boast of reaching to the stars. Once upon a time, the land, on which UB City and Mallya’s house are situated, comprised a brewery, belonging to the UB Group. TOI was the first to break the story on July 11, 2008. |
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| HIGH RISE Property prices show double-digit jump in Jan-March |
Chinese property prices rose at the fastest pace in near- ly five years in March, accord- ing to official data released on Wednesday. This is likely to add to concerns of a bubble devel- oping in the real estate market.
Prices in major cities rose 11.7 per cent year-on-year in March, the National Bureau of Statistics said on its website, marking the biggest year-on-year rise for a single month since the survey was widened to 70 cities in July 2005.
That topped the 10.7 per cent increase in residential and com- mercial property prices record- ed in February and the 9.5 per cent jump in January.
Policymakers have pledged to step up efforts to rein in run- away prices amid growing com- plaints that apartment prices are out of reach for many people.
But homebuyers and prop- erty developers were not get- ting the message and more dras- tic measures like interest rate hikes were needed to calm mar- ket activity, said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong. “Today's data affirms anec- dotal reports that activity and sentiment remains robust,“ said Jackson.
“To convince homebuyers that it is fully committed to curb- ing overheating and reducing bubble risks, Beijing will need to use all of its policy tools, and that most obviously includes higher interest rates.“
Analysts have forecast an interest rate hike as early as this month after massive bank lend- ing in 2009 triggered fears that the cash flood has fed a spend- ing spree by property specula- tors.
Prices of new homes rose by 15.9 per cent year-on-year in March, the statistics bureau said. Haikou, a city on the trop- ical southern island of Hainan, recorded the biggest price jump, up 64.8 per cent from a year ago.
Sanya, another city on Hainan, saw prices soar 57.5 per cent year-on-year.
Property sales in the first three months of the year surged 57.7 per cent to 797.7 billion yuan from the same period last year, it said.
Investment in real estate development rose 35.1 per cent to 659.4 billion yuan over that period.
Courtesy:- Hindustan Times dt:- 14-April-2010 |
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| HOUSING BONANZA - Can't afford a house in Delhi? Relax |
AFFORDABLE NBCC building township in Khekra, 22 kms from Kashmere Gate
With realty prices skyrocketing by the day, here is some good news for those seek- ing affordable housing options near the Capital.
The National Building Construction Corporation (NBCC) Limited is coming up with 8,000 one, two, three and four-bedroom flats, priced between Rs 7 lakh and Rs 45 lakh, in Khekra, Uttar Pradesh.
It is just 22 kilometres away from the Kashmere Gate ISBT on the Delhi- Saharanpur high- way. The prices of the flats are 30% lower than market rates.
“We are coming up with an integrated housing project in Khekra. The project will be completed in two phases and would have all modern ameni- ties. It will be completed in the next two to three years,“ said Arup Roy Choudhury, chairman-cum-managing director, NBCC Ltd.
While draw of lots for the first phase, where 1,100 flats were up for grabs, was held in March, the lottery for the second phase for remaining 6,900 flats would be held later this year.
The Khekra township is com- ing up on 100 acres.
This would be the PSU's sec- ond housing project in the National Capital Region.
“The shortage of housing in urban areas was the reason we ventured into the sector. Our objective is to fill the huge demand-supply gap in the hous- ing sector by providing afford- able housing,“ said Choudhury.
Last year, NBCC had launched two housing schemes -- in the mid and low end cat- egory -- in Gurgaon, Haryana and Loni, Uttar Pradesh.
In Gurgaon, NBCC is coming up with 4,000 flats for employ- ees of central government and public sector units. The flats are priced between Rs 22 and Rs 45 lakh.
Similarly, in Loni 2,000 flats are being developed in the mid segment category. Fifty per cent of the flats will be reserved for government employees while the remaining 50 per cent will be open to the general public.
These flats are priced between Rs 7 and Rs 15 lakh.
NBCC launched its first hous- ing scheme in Delhi last year where 2,500 flats, priced betw- een Rs 25 lakh and Rs 60 lakh, are coming up near the Ghitorni metro station on Mehrauli Gurgaon road. The flats will be ready by 2012.
Courtesy:- Hindustan Times dt:- 14-April-2010 |
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| IFRS to impact real estate companies revenue accounts |
All real estate companies on NSE’s, BSE’s Sensex 30 will have to report financial returns according to the stringent revenue recognition norms laid down by the proposed International Financial Reporting Standard(IFRS).
In India, Developers are recognizing their revenue on agreement for sale of a flat is signed. They do this process at the time of construction. Starting or upto 20% but under the IFRS, only when an apartment in constructed and ownership rights are transferred.
According to Mr. Amarjeet Chopra President the Institute of Chartered Accountant of India (ICAI) is in no mood to exempt any sector from adopting these standards. If real estate sector have any objection, let him talk about it.
According to Mr. Santosh Rungta, President of the Confederation of Real Estate Developer of India (CREDAI) will study the all impact of IFRS on realty sector and is also planning to take up the matter with government .
In 1st Phase, the IFRS rules will impact companies with Net worth of over Rs 1000 crore or have issued Foreign Currency Convertible Bonds(FCCBI) or Global Depository Receipts(GDRs) over 100 countries now accepted IFRS norms. |
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| Jaypee Greens is launching the Kingswood Oriental, which has taken cues for design elements from the oriental architecture and landscapes, says |
| Krishna Kumar Mangalam |
Jaypee Greens Noida is launching a new product at Jaypee Greens Wish Town, Noida — Kingswood Oriental. The Kingswood Oriental community comprises premium individual residences, adjacent to an 18-hole Graham Cooke golf course, with an expansive and breathtaking view of golf greens on one side and a chip & putt golf course on the other.
There are 160 units, in two sizes, with a built-up area of approximately 3,700 sq ft and 4,600 sq ft. “We will be offering different layout designs to the customers,” says Manu Goswamy, head of business development and strategy at Jaypee Greens. The price of these exclusive homes starts from Rs 3 crore at a basic selling price of Rs 8,100 sq ft — each villa will have three floors.
Kingswood Oriental is aimed at a niche market — the discerning clientele will be offered a very exclusive community of luxury homes where the design elements have taken cues from oriental architecture and landscaping, apart from of course providing them with the finest in luxury fittings and fixtures. The community will have some special features, as it has been billed as “one of its kinds in the country”, and to give it a premium look and feel the following features are proposed for the community as a whole, and for individual villas.
Community special features
Kingswood Oriental will be a separate community within Wish Town and access to this will be restricted only to the buyers and their guests Multicoloured Orientalstyle wall paintings in common areas like social clubs, etc Zen Gardens and Bonsai draped landscaping to go with the theme Beautiful waterbodies as landscaping element Adjacent to the 18-hole golf course Oriental street lighting and street furniture Pebble walkways in parks lined with flora from the Far East Golf carts for local transportation within the community
Home features
Use of wood and bamboo in the design to go with an oriental feel Private lily ponds in each home Provision for elevators in each home Jacuzzi in the master bathroom Miniature gazebos in the back garden of the house Terrace garden with barbeque Top-of-the-line security system featuring videophones and burglar sensors
Oriental clubhouse
Exclusively designed clubhouse which has been designed using cues from the Southeast Asian architecture, will be of approximately 60,000 sq ft of built up area Wellness zone with state-of-the-art gymnasium and fitness centre; yoga, aerobics areas Multi-cuisine restaurant Exclusive members lounge area Party halls & gardens
Range of sports facilities
Tennis courts Squash Swimming pool Pool/snooker Library Goswamy says, “The Kingswood Oriental residences will be a perfect harmony of luxury lifestyle with a touch of oriental architecture, combined with the latest technology for leisurely life. We have added 17,000 customers in the last two years alone in the NCR. The customers for individual houses in the higher and premium segment look for uniqueness and demand exclusivity and this project will fill this gap in Delhi NCR.” Wish Town, the largest township in Noida, is spread over 1,162 acres. It is a gated resid e n t i a l community with dedicated s p a c e s catering to all comforts in urban living and the developer says it offers the finest choices for the new home buyers in the NCR. Just off the Noida-Greater Noida Expressway, it is on a 30-minute drive from Connaught Place, and 15 minutes from Ashram chowk. Jaypee Greens Noida bills itself as “Golf-centric real estate development” — there are two golf courses in Wish Town. Some of the features of Wish Town, an integrated township, where Kingswood Oriental is coming up: 9-hole and 18-hole golf course designed by Graham Cooke Acres of landscaped greens and Zentheme gardens 450-bed Jaypee Super Specialty Medical and Research Centre, equipped with the latest medical equipment and healthcare services
Boomerang (A club which is expected to be one the finest clubs in the country)
Some of the advantages of Wish Town are its location — it is close to the Noida-Greater Noida expressway. Also, it is just 10 minutes drive from Ashram Chowk and it is slated to have Metro connectivity in the near future.
The Jaypee Group is a well-diversified infrastructural and industrial conglomerate in India with engineering and construction, cement, private hydropower, hospitality, real estate development, expressways and highways among its portfolio. The group is synonymous with premium lifestyle developments through exclusive golf-centric real estate, and in the words of Goswamy, “Our focus is not just on the house you buy, but also the environment you live in.”
Jaypee Greens in Greater Noida bagged the “Best Golf Development-India” from CNBC Asia Pacific Property Awards in 2008.
Courtesy:- Times Property dt:- 10-April-2010 |
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| Those looking for good buys in the NCR can check out unsold stock in projects that are complete or nearing completion, says Syed Amir Ali Hashmi |
The summers are here and the search for homes has become doubly difficult as one has to not only face the scorching sun, but also take the heat of rising real estate prices. But wait, that's not all. If you are on the lookout for a new apartment that's ready for possession, then get ready with a bigger stash of cash, for that's certainly not going to be cheap.
Area in focus This week we look at Ghaziabad, one of Delhi NCR's hot draws, offering affordable apartments to the middle-class buyer who also doesn't find the commute to the city centre that tough to handle. Now the question is, where should one look (for a home) in Ghaziabad?
You are here Kaushambi, Vasundhra, Raj Nagar Extension, Vaishali, Crossings Republik have projects which have been launched and sold some years back and are almost ready for possession. A num- ber of buyers today are interested in the flats that have not been sold in these projects. “We have complet- ed first phase of River Heights in Raj Nagar Extension and possession has started. The prices at Raj Nagar are still low unlike other places. For people, who think their pocket permits, should look for homes in ready-to-move-in projects, as they will not have to wait long for delivery and will also avoid paying rent and home loan EMI simultane- ously,“ says Manu Garg, MD, Landcraft developers. (See box for list of projects) The cost?
“It's obvious the costs (since project launch) of these flats have gone up by 40-50 per cent. Some flats in our proj- ect Gulmohar Greens, Mohan Nagar, are empty but the prices now are around Rs 2,720 per sq ft as against the launch price of Rs 1,900 per sq ft two-three years ago,“ says Sunil Jindal, CEO, SVP Group.
A lot of people want affordability to be factored in when it comes to ready proj- ects, but that, say builders, could be asking for too much. “It is not possible for people looking for houses in these projects to get low- price deals.
“When a project gets com- pleted it comes up with appreciated price and this appreciation depends on many factors apart from just location,“ says Dujendar Bhardwaj, JMD Group and company, realty agents.
As most of these homes are in completed projects, these are in areas where infrastructure, etc, has come up. “Location is the most important factor in the real estate scenario and prices are directly proportional to it. If you have decided to invest in such a project, then scout around for a good loca- tion where other facilities are also functional. If a per- son is buying a ready home from a developer directly, then the prices might be a little higher than the market rates. This is more so because in such cases the payment to the developer will have to be done in white,“ says Pradeep Mishra, real estate analyst. Why do flats remain unsold?
Experts say that many real estate developers hold back their inventory and sell it later at a higher price. When they breakeven after the launch of a project and think they can complete the proj- ect with the money collected, they hold back the inventory.
So 60-70 per cent of the proj- ect is sold off and the rest held back.
Of course cases vary from developer to developer. “In our case, at SG Impressions in Vasundhara, we did not get the permissions for a duplex apartment at the time of launch. So we could not sell it at that time. Hence, these apartments remained empty.“Not getting the requi- site permission also means the stock remains unsold.
Apartments getting clear- ance much after the launch of a project are often put up on sale, much later after pos- session of other flats have been handed over. This might happen due to various reasons such as increase/ purchase of floor area ratio (FAR),“ says Gaurav Gupta, director, SG Estates.
Is it a good buy?
“Yes, it's a good buy for peo- ple who want ready facilities like shopping complexes, other facilities such as hospi- tals and schools nearby, good infrastructure and good accessibility. It is good for people who want to move in immediately. However, peo- ple who buy for investment won't get good returns. Such buys won't also suit people for whom budget is of utmost priority,“
Courtesy:- HT Estate dt:- 10-April-2010 |
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| Munirka Enclave resident Jai Kumar, a retired Air Force officer who now runs his own business, talks to Ritu Ghai about the joys of living in the heart of south Delhi |
Tt was in 1978 that I saw a IDDA advertisement in a newspaper. It was the first Self Financing Scheme (SFS) from the Delhi Development Authority (DDA) inviting mid- dle-class families to buy a flat in South Delhi by making the payment in instalments.
My wife, three daughters and I were living in a rented floor in Uday Park at that time. I didn't want to let go of an opportunity to buy my own place in South Delhi and immediately went to the Vikas Sadan DDA office. I bought the brochure that cost about Rs 5,000. It contained the terms and conditions and the eligibility criteria. I was to fill up a form and give three locations as preferences. Allotment of the flats was to be made through a computerised draw after scruti- nising the applications that ful- filled the eligibility criteria, and other terms and conditions. It was a very transparent system that aimed to solve the housing needs of many families. In fact, Munirka Enclave was our third choice after Hauz Khas and Sarita Vihar.
Moving in Arranging funds was the next step towards making the dream home a reality. The house was priced at Rs 1.38 lakh and we had the option of paying the money in instal- ments, after making an initial payment of Rs 20,000. I decid- ed to pay the entire amount in the first instalment after tak- ing a 20-year loan from HDFC.
Thus, I was able to procure this three-bedroom ground floor flat in Munirka Enclave after submitting the necessary affidavits, down payment, forms, photographs attested by a gazetted officer/first class magistrate and completing other formalities.
The possession was given to us with the basic framework, doors, bathroom fittings, sewage and civil work. It had a small front lawn and a back- yard. Initially, we made no structural changes because funds were limited at that time.
We got some woodwork done and installed grill doors. The flat was, however, well laid out and comfortable.
The colony has 204 flats and water has never been a prob- lem. Being a small colony, it has been easy to get familiar with the people around us. With parks and ample parking space, Munirka Enclave has been a welcome change for us. I have recently also joined a DDA scheme in which the leasehold on my property will be convert- ed to freehold by paying Rs 25,000. A freehold flat can be sold or transferred without a clearance from the DDA.
Adjusting to the times Munirka Enclave has its own association that takes care of maintenance and security. The time for opening and closing the gates is fixed, and visitors are required to enter their details in a register kept at the gate. The colony does have the usual problems. People are unwilling to raise the monthly maintenance subscription in line with rising prices. This has not only affected the quality of maintenance but also created a rift between residents.
I have seen the happiest and saddest moments of my life in this house. My three daughters got married here and the house is also witness my five grand- sons and grand-daughter growing up. The saddest moment came when I lost my wife. However, the good moments have helped me recover from this loss and nowadays I stay here with my second daughter Deepika, her husband Vinod, their daughter Shonan and son Siddhant, who is a very talented, young polo player. My eldest daughter is in the US while the younger one lives in Noida.
Developing hub Munirka Enclave is a nice place to live in. It's close to Vasant Kunj and various south Delhi markets and malls. Over the years, the Nelson Mandela Marg has become very busy and the Priya cinema complex nearby is one of the most hap- pening spots for the urban elite and youngsters.
Munirka Enclave's close proximity to the IGI airport makes it convenient for makes it convenient for my son-in-law who flies frequently for business.
The house has been recently renovated with complete change of win- dows, flooring, tiles and woodwork. As the family grows, needs change and the recent renovation reflects this. I love spend- ing time playing golf, reading and spending time with the family in the common lobby. I am happy to have my flat here.
Courtesy:- HT Estate dt:- 10-April-2010 |
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| Select a home of your choice at Property Expo |
On Saturday and Sunday, you can choose real estate property of your choice at one of the biggest real estate expo, 'Property 2010' organized by the
Times Group |
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Property 2010, being organized on April 10 and 11 will be an exhibition of one of the most diverse residential and commercial properties in Noida, Greater Noida, Indirapuram, Ghaziabad, Gurgaon, Faridabad and other parts of the National Capital Region. The expo will also have finance companies, which will not only enable visitors to select a property but also to avail funds to buy them at the most competitive rates.
Such expos have been found very useful for end users as they make available all the possible choices at one place. Developers exhibit their products with the help of models, which enable end users to know the product better and help them in taking right the decision.
As a number of developers will be available under one roof, you can compare the residential units then and there and take a decision. Not only this, it will also help you bargain hard with the developers to arrive at a most competitive price.
Times Group has been organizing such expos to help end users find suitable houses. Now, as the market has revived, a number of developers have floated a large number of projects in various segments. The large number of choice in the market often confuse buyers and they are left running around from one developer to another to find the best accommodation for themselves.
While such expos will help end users in comparing the large number of alternatives then and there, it will also provide a good opportunity to investors to not only understand the new trend in the market but also to make a decision to buy the right kind of property.
While Supertech Limited has taken Title Sponsorship, Amrapali and Sumangalam are the associate sponsors. Other participants are Gaursons Builders, Today Homes, Paras Group, Aditya Group and Saamag Construction. Besides them, leading property consultants like S&A Finman, Prithvee Propmart, Better Option Propmart and Krishna Infratech, among others, will be presenting a lot of other options from other developers to the visitors.
CEO of Supertech Eco Village, Mohit Arora said the 150-acre eco-village project in Greater Noida sector I (Noida Extension) will provide an affordable housing option to end users in the truest sense. The project has been well received by end users in the market. Gaursons will also showcase a number of projects including the one in the Noida extension. Saamag construction will exhibit their NH-24 Cresent ParC project.
Courtesy:- Times Property dt:- 10-April-2010 |
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| A Weekly Real Estate Reports of Mumbai, Bangalore and Kolkata |
MUMBAI
A premium residential apartment located in Central Mumbai was purchased in a primary sale at a total cost of Rs 14,00,00,000. The 4-bedroom unit is spread across an area of approximately 4,000 sq ft and commanded an average capital value of Rs 35,000 per sq ft, which is at par with the range of Rs 34,000-55,000 per sq ft prevalent in the location. The apartment comes with four dedicated car parking lots. The apartment is situated on a higher floor at a residential project located in Mahalaxmi. The project boasts of numerous value-added amenities like club house, landscaped garden and walkways, barbeque location and an amphitheatre, in addition to three swimming pools for the residents. Central Mumbai has been witnessing many premium developments as residential demand in the location from end-users as well as investors is high. The location is situated at a comfortable distance from major business districts of Nariman Point and Bandra-Kurla Complex, while Central Mumbai itself is developing into an office location. It has remained steady in terms of capital values for high-end property and is expected to remain stable in short to medium term.
BANGALORE
A high-end residential apartment admeasuring 2,500 sq ft was sold for a total value of Rs 1,50,00,000 in a premium residential complex located near Hebbal Lake. The 3-bedroom apartment fetched approximately Rs 6,000 per sq ft which is in line with the values prevalent (Rs 6000-13,000 per sq ft) in the location. This apartment, which is part of a premium residential development, offers to its customers a wide variety of services, including club house and sports facilities such as squash, badminton and a swimming pool. Hebbal is one of Bangalore’s rapidly expanding residential markets. While the area is situated in the North, the location enjoys connectivity through the ORR and other arterial roads into the city and to the major commercial and retail destinations across the city. The residential market had registered a considerable correction in its capital values of approximately 32% in 2009. However, it has seen some appreciation in the past quarter and is expected to remain steady in the short-tomedium term.
KOLKATA
An apartment, located on EM Bypass and admeasuring 2,393 sq ft was sold at a total cost of Rs 1,04,98,460 (Rs 4,220 per sq ft). This is one of the city’s upcoming residential locations with many mid- and high-end residential units, which have been witnessing some active end-user demand, post the recent economic slowdown. The location enjoys proximity to the established CBD and SCBD and to the new IT hubs of Salt Lake and New Town Rajarhat, thus making it an ideal location for residential development. After having experienced a slowdown, the location has started to see some revival and a resultant increase in capital values of approximately 8% over the previous quarter and is expected to remain stable with an upward bias in shortto-medium term.
Courtesy:- ET dt:- 09-April-2010 |
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| Emaar bets big on a high-return India |
| Co To Raise Rs 3,500 Cr, Shift Focus To Residential Units |
AN OFFICIAL of Dubaibased Emaar Properties says it will continue to focus on India as it offers the best investment opportunities across the 16 countries in which the real estate developer is present.
“Given the robust domestic market and high economic growth rate, India will continue to give superior returns compared to other countries in the developing and developed nations, including the US and the UK,” the official Mohammad Alabbar, chairman of Dubai-based real estate firm Emaar Properties, told ET.
Its Indian arm, known as Emaar-MGF plans to raise Rs 3,500 crore from the Indian capital market by way of a public issue. The company has received permission from the market regulator, Securities and Exchange Board of India (Sebi). The company has invested $4 billion abroad, of which $1 billion is in Indian joint venture, which is with Delhibased MGF Group.
Mr Alabbar is here to evaluate the timing of the proposed IPO. “We have got Sebi’s approval and plan to launch the issue in an appropriate time,” he said. The company had made an attempt to enter the capital market in February 2008, but the issue had to be aborted in the wake of a market crash.
On the impact of the financial crisis, which engulfed the Emirate in late 2009, Mr Alabbar said as demand for real estate had already dropped sharply following the crash of 2008, it hasn’t had much of impact. “It did result in a jolt as lenders hardened interest rates by about 1-1.5%, which has started softening now,” he said.
Part of the proceeds from the proposed issue will be used to repay debt and facilitate other expansion plans, Sharvan Gupta, managing director of Emaar–MGF, said. The company currently has debt of Rs 5,000 crore, of which it plans to pay Rs 2,500 crore this year.
Emaar-MGF, which is primarily known for its commercial projects, is looking to shift its focus on residential units this year.
“Demand in the real estate sector in India has picked up and property developers will be able to attract buyers if they keep the price of residential units at a moderate level,” Mr Gupta said.
Emaar-MGF currently has 30 million sq ft land under construction and plans to add another 15 million sq ft in the next one year. The firm plans to deliver at least 8 million sq feet by this year. Housing prices are still lower than the booming period of 2007, Mr Alabbar said.
Courtesy:- ET dt:- 09-April-2010 |
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| Small is the new big for investors |
| Suddenly there is no stopping luxury brands, hotels, retail formats from entering Tier 2 and Tier 3 cities in what may be bigger and better avatars than even in the metros |
Namrata Kohli
If you thought 'mall' is Greek and Latin to someone in smaller cities and towns you surely need a reality check. Smaller city folk are not being treated to some lowbrow 'country cousin' version of your metro malls - instead, they are witnessing much better and bigger developments. Businessmen have smelt the appetite of locals and are crowding into Tier 2 and Tier 3 cities to encash upon the first mover advantage and grab vast plots at reasonable rates (as against the metros, which suffer from both paucity of land and high real estate costs).
The head of operations of a big retail chain shares his perspective saying that smaller cities is the way to go for big brands now. Citing an instance, the industry insider says that when Globus had opened its store at a place like Varanasi, no one was sure what would happen, but today, the store has outperformed its Mumbai counterpart. Even the Crossword store in Visakhapatnam and other small cities in south India are doing great - so much so that a second outlet has been opened there.
Retailers, realtors, hoteliers are now seen heading to smaller cities which conventionally were not on the organized business's radar. Take a look at the 6 lakh sq ft Alpha One mall at Amritsar and anyone would agree that it has a good mix of international, national and regional brands available anywhere.
Even luxury hotels have zeroed in on Tier 3 cities. Just imagine, one of the most sought after spas in the country, Ananda, chose Amritsar to open its only branch at a 5-star luxury hotel, Ista, which is owned and managed by hospitality chain IHHR. According to Ashwin Handa, general manager of Ista, "Ista is Amritsar's only 5-star luxury hotel and we decided on Amritsar as the city has a huge tourist influx and offers great potential."
The same logic holds true for mall developers and according to Pickles Sodhi of Alpha G Corp, "Punjabis like to shop and they like to spend money and enjoy a good life. My investment in Amritsar was more of a gut instinct based on the facts, of course, that Amritsar is a huge religious draw - there is enormous tourist influx and many NRIs frequent this religious destination. The paucity of a decent mall spelt opportunity. Next, we plan to target Chandigarh, Jalandhar and Ludhiana. And after that we are readying a 7 lakh sq ft mall at Ahmedabad." He adds that they have tried to retain the local flavour by introducing Amritsari bazaar, which will retail Amritsari crafts, phulkari, etc, and encourage shopping of local goods in sanitized environment.
Fun Cinemas' Atul Goel feels that small cities are hugely receptive to new ideas. Fun Cinemas already has multiplexes at Chandigarh, Lucknow, Ahmedabad and Coimbatore. "We are entering Amritsar with a multiplex which will have the first gold class in Punjab. Priced within Rs 500 per cover, this 35-seater will provide endless cold drinks and popcorn to patrons." Goel adds that they are trying to tap the aspirational living value of people and showing them a taste of good life, "once they taste it and learn to enjoy it, they will ask for more and this way they will grow with us".
North India's first hypermarket Hypercity Retail (India) Ltd has opened in Amritsar in Alpha One mall. B S Nagesh, vice-chairman, explains: "In this vast floorplate of 1.4 lakh sq ft, a shopper gets everything from the freshest malta to jeans worth Rs 199 to LCD TVs. Besides, there is a feature called Daily diamonds, which is meant for today's women who can pick up their favourite piece of jewellery at price points of Rs 2,000 to Rs 10,000, while shopping for daily groceries. We are here to create lasting value and we are giving ourselves three years to break even."
But when retail strikes smaller towns do they replicate their city formats or customize to the local tastes? Govind Shrikhande, CEO of Shoppers' Stop says that the stores have similar merchandise albeit with some changes. "We are stocking pagdi (turbans) and jutti (shoes), as these are important part of the basket of a shopper in Punjab. Besides, our thrust will be on stocking more casuals than formal wear since Amritsar is not home to many corporates yet, unlike Delhi or Mumbai. Also, we would include brighter shades and focus more of traditional wear."
However, what does not keep pace with these striking private developments is the poor public infrastructure. There is glaring contrast between public utilities and private developments and this is evident as soon as you step out of Alpha One mall and are greeted with poor infrastructure. Says S K Sayal, director & CEO of Alpha G: Corp: "While making this mall we were faced with infrastructural bottlenecks like lack of electrification, storm water drainage system, sewerage system - there is no master plan for these cities. But the authorities are slowly but surely realizing that infrastructure has to be built and we would say that one thing is leading to another. Things are certainly improving."
FOCAL POINT
• Smelling the appetite of locals, developers have turned their focus to the Tier II and III cities, and are going all out to set up businesses there
• Leave alone big brands, luxury hotels and multiplexes too have realised the need and importance to show their presence in the Tier II and III cities and tap the aspirational living value of people living in the small towns
Courtesy:- ET Realty dt:- 09-April-2010 |
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| Emaar MGM may launch IPO in next 90 days |
NEW DELHI: Realty player Emaar MGF on Thursday said it may hit the capital market within the next 90 days to raise about Rs 3,500 crore through an initial public offer (IPO), its second such attempt after it was forced to withdraw by poor market response in 2008. “Within the next 90 days we may launch the IPO but it will depend on how the market is,” Emaar MGF vice-chairman and MD Shravan Gupta told reporters. The company had in 2008 planned to launch its maiden public offer to raise Rs 7,000 crore, but had to withdraw due to poor market response. With the stock market again on the upswing in the recent past and even touching the 18,000 mark this week, the company is looking to take the opportunity.
Courtesy:- ET dt:- 09-April-2010 |
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| GEARING UP FOR THE GAMES - Commonwealth village apartments ready, developer starts handing them to DDA |
The Commonwealth Games Village luxury apartments are ready and Emaar MGF, the developer, has begun handing them over to DDA.
The residential project on the banks of river Yamuna will house athletes and officials for the Games that will be held from October 3 to 14, 2010.
“We have begun the process of handing over the apartments to DDA,“ said Shravan Gupta, executive vice-chairman and managing director Emaar MGF.
The project, with 1,168 apart- ments, was to be built on a pub- lic-private-partnership model between DDA and Emaar MGF which won the right to develop the 118-acre residential project in competitive bidding from DDA at Rs 321 crore against a reserve price of Rs 300 crore.
As per the arrangement, DDA got ownership over onethird of the apartments over and above the Rs 321 crore from the developer. Emaar MGF was to retain ownership of the rem- aining 790 apartments which it expected to sell in the open mar- ket and raise money.
However, last year's financial crisis and realty slump meant the company couldn't find buy- ers and raise money. It asked DDA for a bail out which it got--DDA purchased another 333 apartments for Rs 770 crore.
“Market conditions are improving. There has been a robust demand for quality res- idential projects,“ said Gupta.
He claimed the company has managed to sell a major portion of these apartments.
After the games are over the developer would refurbish the apartments and physically hand over the apartments to end- users by early next year.
Courtesy:- HT dt:- 09-April-2010 |
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| Property rates to remain stable |
If you are planning to buy a house this year, take all the time you need.
A Crisil research report on residential property prices of India's 10 biggest cities says prices will remain more or less stable with a moderate dip in prices in Mumbai and a marginal (2 per cent) rise in the National Capital Region (NCR) in 2010.
According to the report, the average capital appreciation in the 10 cities is expected to be 2-3 per cent. Bangalore and Chennai are expected to see the highest rises of 7.3 per cent and 5 per cent respectively. On the other hand, Ahmedabad and Mumbai will see a correction in prices by 1.8 per cent and 0.4 per cent respectively.
Interestingly, Mumbai witnessed the maximum rise in prices by 11 per cent between March and November last year, the report said. While Central Mumbai witnessed a price rise of 21 per cent, the central suburb saw 15 per cent hike.
“Mumbai has already witnessed a steep recovery in prices after the correction in 2008 and the demand has slowed down since December 2009,“ said Sudhir Nair, head, Crisil Research.
Developers, however, disagree. “We have not seen any drop in demand and I believe demand for residential real estate will go up by 30 per cent this year,“ Niranjan Hiranandani, vice chairman & MD, Hiranandani Construction said.
“Mumbai is so starved of volume that unless land supply increases, prices cannot drop,“ Dharmesh Jain, CMD, Nirmal Lifestyle, said. “Considering the rate of inflation, we expect that prices in Mumbai to go up by 5-12 per cent in 2010, depend- ing on the location and quality of constriction of building.“
The expected price rise in Bangalore and Chennai is on account of recovery of the IT sector. “The confidence is back now in the (IT) sector leading to a demand in those areas,“ said Nair.
Courtesy:- HT dt:- 09-April-2010 |
| Unitech forms panel to push demerger |
UNITECH has formed a panel of five board members to push the demerger of its non-core businesses into a separate entity as the country’s second-largest real estate developer looks to focus on its mainstay, realty.
The company plans to hive off its investments in telecom, hotel and special economic zones into a new offshoot, said a senior executive, requesting anonymity. Unitech owns a 33% stake in Uninor, a telecom joint venture with Norway’s firm Telenor.
All Unitech shareholders will get proportionate shares in the new entity after listing, he said, adding that the restructuring will help unlock value for them.
Unitech shares closed marginally higher at Rs 76.55 on the BSE on Tuesday. At this price, the company’s market capitalisation is a little more than Rs 18,000 crore.
Consultants Ernst & Young and SR Batliboi & Co as well as legal firm Amarchand & Mangaldas will advise the panel about the restructuring.
Courtesy:-ET dt:- 07-April-2010 |
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| Unitech appoints E&Y for demerger plan |
Realty major Unitech said on Tuesday it had appointed Ernst &Young (E&Y) and two other advisors for exploring opportunities for potential restructuring of its business, to unlock value for shareholders. The company’s board of directors has constituted a restructuring committee for evaluating opportunities for “potential merger of subsidiaries, demerger and other forms of restructuring, or acquisition, or spin-off with the ultimate object of enhancing and unlocking shareholders’ value”
Courtesy:-BS dt:- 07-April-2010 |
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| Mumbai realty developers offer to build 500,000 affordable houses |
BS REPORTER Mumbai, 6 Apri
Real estate developers in Mumbai propose to join hands to construct 500,000 affordable houses for middle and lower income groups in partnership with the Maharashtra government in the next five years in the fast-growing Mumbai Metropolitan Region (MMR). The MMR region comprises Mumbai and the adjoining cities and towns such as Thane, Dombivli, Kalyan, Vasai, Virar, Mira Road and Nalasopara.
The project, as proposed, entails an investment of over Rs 15,000 crore. Houses of 160 sq ft to 600 sq ft are proposed to be created. The floor space index proposed (the ration of total built-up area allowed on the given land area) is three. The project would be implemented under the aegis of the Maharashtra Chamber of Housing Industry (MCHI).
The idea is also to take inputs from the ongoing schemes of rental housing implemented by the state-run Mumbai Metropolitan Region Development Authority, public-private partnership carried out by Maharashtra Housing & Area Development Authority and the slum rehabilitation scheme. MCHI President Pravin Doshi said details of the financial requirement of the project was being worked out.
“Residential housing can be made affordable by release of land by the government, increase of FSI, reduced taxes, single window clearance on plans and availability of micro finance.
Through this partnership, our endeavour is to arrive at some substantial solutions to cater to the ever growing need of demand for homes,” Doshi said.
However, Doshi was unable to explain what MCHI meant by affordable housing. He said it would depend on location. He repeatedly said MCHI and its members had no hidden agenda: they would not seek any extra favours from the state government for the construction of 5,00,000 affordable houses.
According to the information available with MCHI, Mumbai alone has an immediate demand of 1.4 million homes, of which 80 per cent comes from the Rs 3-5 lakh income group. There is also an unmet demand for basic affordable housing in Mumbai and the metropolitan region.
MCHI office-bearer Dharmesh Jain said the proposed mass housing project would help increase volume and stabilise the realty market.
“Ultimately this will lead to mass consumption,” he noted.
The project entails an investment of over Rs 15,000 crore
Courtesy:-BS dt:- 07-April-2010 |
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| Land value may be kept out of tax net |
| Proposed Service Tax On Under-Construction Homes May Exclude Circle Rate Of Land |
THE FINANCE ministry may exclude land value from the ambit of a new tax on under-construction houses, potentially taking the sting out of the proposed levy after it ran into a storm of protests from the real estate sector and exposed fissures within the government.
The 2010-11 budget has proposed a 10% service tax on 33% of the total cost of under-construction houses, which could increase the price tag of such properties by 3.3%. The new tax will come into effect once the budget is approved by Parliament.
But protests from a real estate sector worried that the tax could harm its nascent recovery and a demand by the urban development ministry to review it has forced the ministry to consider a retreat and look at ways to ease the burden on potential homebuyers.
Finance ministry officials said they were examining ways to separate land costs from the overall cost equation and take it out of the purview of the proposed tax. “We are looking at the issue to see how this can be done,” an official told ET.
Any change will make the new service tax more acceptable to all stakeholders and also introduce greater transparency in the pricing of homes by providing a break-up of cost. Its impact could be especially felt in major cities where land costs account for a bulk of the cost of under-construction properties.
“The proposed reduction will bring in a huge relief to both consumers and realty companies,” said an executive with Delhi-based real estate developer Ansal API.
The change could take much of the sting away from the proposed tax, especially since 67% of the property cost is not covered by it because it is considered as the cost of material used in construction.
Excluding land costs, the effective rate of service tax will fall to 1.75%, added Pradeep Jain, chairman of Parsvnath Developers.
Experts say the ministry could use circle rates or floor prices for areas set by states for computing land costs. But stripping out the land costs could prove complicated even when floor prices are available because ascribing land value to a flat in an apartment complex may be difficult.
“Practices are not consistent in the whole of country so it will have to be seen how a mechanism can be worked out,” said Rajeev Dimri, leader of indirect tax practice at BMR Advisors & Co.
The precedent of excluding land value from tax already exists in some form. State governments, for instance, do not include the value of land while imposing tax on works contracts.
Tax experts have questioned the legality of the proposed service tax, arguing that land is a state subject. “Whether the centre can tax land or property is a challenge. Imposition of service |
| |
| Art in the eye of the beholder |
We collect art; we buy real estate; but is there common ground for the two to meet? On the face of it, they are not mutually exclusive, for any art needs real estate to give it context. But is their value calculated when conjoined, or separately? And how does it engage buyers investing in a residential real-estate project in Gurgaon that promises to rewrite the rules of town planning within our urban ghettos? At the centre of this premise is the promoter’s decision to engage an artist who promises to add “soul” to the project —at best, a notional quality, not something to which you can put value to. While art in the development might be easier to put a price on, for its buyers, is it too not merely notional? At the heart of this debate is the question of how to put value to art that is both part of a development project as well as bespoke, something tailored and built into a few designated villas or penthouses. It has a price point when commissioned, but does it impact resale value? Will escalations in real estate keep in mind the rise in the value of an artist’s contribution? Will there be a separate and additional value for the artworks? It appears, so far, not.
When the Glaxo building in Mumbai was sold, no one considered the value of the Krishen Khanna painting in the foyer, which was later dumped in a store by the caretaker, where it lay abandoned for years. When afire destroyed a part of Vigyan Bhawan in New Delhi, a sculpture commissioned by Amarnath Sehgal met with similar fate, and the artist had to wage a bitter battle to have it restored in the public domain. Do hotels, which often invest their properties with larger tranches of art, view it separately when selling or merging with another chain? Does it have any negotiable value given the new promoters may want to change the look — and art — they wish to showcase as part of the newer experience? Did the MF Husain ceiling at the Kanishka even enter the picture when the ITDC hotel in the capital was disinvested to become the glitzy Shangrila? (Husain had loaned these works to the hotel, and simply withdrew them when it did not exercise the option of buying them.) Have the Taj and ITC hotels undertaken any exercise to put a value to their art collections? The ambitious M3M group which has announced the Ramesh Khosla-designed, Basant Bansal-promoted 70-acre Golf Estate township with art inputs by artist Satish Gupta, raises these very issues. Satish Gupta’s work devolves around the concept of the five elements and is imbued with a deep spirituality. He has bridged the gap between painting and sculpture, textiles and landscaping in his own studio, to recreate a lifestyle that treats nature with respect.
The challenge now is to provide the same value to a large township, and to customise at least some of the properties with elements of art that will enhance the value of the homes, but also not dominate the space for buyers who may have their own ideas about the art concepts with which they wish to surround themselves.
Golf Estate will have a builtup value of Rs 15,000 per sq ft (which makes the introductory offer of Rs 6,100 a sq ft hugely attractive), but what is one to make of the value of Satish Gupta to the project’s resale value and escalation over time — and can one divorce the value of art and real estate at such point? Has India evolved sufficiently to pay a premium simply because prime property also has an artist’s name attached to it? A lot might depend on how the Bansals promote this aspect of their township. Publicising the artist’s inputs could create a value above and beyond just that of the real estate. The only parallel that comes to mind is the buildings artist Satish Gujral created in the capital between the mid-1980s and the mid-1990s — most prominently the Belgian Embassy, and the Mexx farmhouses. The architecture carried the stamp of a Gujral sculpture. Even so, it is unclear how the artist’s premium will be calculated in any secondary market sale. Clearly, the square inch value of a work of art cannot be imposed on the square foot measure of real estate, just as an artist’s escalation in price terms cannot be imposed over and above the value of the real estate.
It is this that makes Golf Estate interesting. The Montrealbased architect has promised a township that will set a benchmark for India. Will Satish Gupta set a similar point of reference on how an artist’s intervention in architecture can result in an extraordinary realisation of value?
Courtesy:-BS dt:- 07-April-2010 |
| |
| City still prefers independent houses |
| Only 14.81% Of Population Lives In
Flats, Big Bungalows Giving Way To Smaller Homes: Survey |
| TIMES NEWS NETWORK |
New Delhi: If you think multistoreyed flats are
gradually occupying the city landscape, you are wrong. Delhi is still very much
the city of independent houses rather than flats — 73.60% Delhiites live in
independent houses and 14.81% in flats. This was revealed by the report on the
Level and Pattern of Household Consumer Expenditure in Delhi which was released
by finance minister A K Walia on Monday. However, the sprawling bungalows which
were once the hallmark of the city — they still are but only in Lutyens’ Delhi —
have been replaced by far smaller living spaces, with 52.84% families living in
a home that measures less than 450 square feet. At least 62.05% Delhiites own
the places they live in and 35.16% have hired dwelling units. The report — which
is based on the 64th round of the National Sample Survey held between July 2007
and June 2008 — predictably found that Delhiites have the highest per capita
expenditure in the country. The bulk of that — 37% — is spent on food items, an
oddity, considering that the city government has been in a self-congratulatory
mode over the past few months about the inflation figures being the lowest in
the capital among all Metros. An interesting study was the steep rise in the
monthly per capita expenditure on food from 2004 to 2008. For cereals, it has
gone up from Rs 89.42 to Rs 133.78, on milk and milk products it is up from
157.19 to 212.07 and on meat, fish and eggs it is up from Rs 16.40 to Rs 30.89.
The expenditure on intoxicants, pan and tobacco were the least hit with the
difference being Rs 6.78 to Rs 10.80, Rs 9.68 to Rs 9.77 and Rs 2.86 to Rs 3.10
respectively. The average monthly per capita spend on consumer goods rose only
marginally in these four years from 102.37 to 103.78. The spend on footwear went
down from 24.38 to 24.25. Of the average Rs 767 per capita spend on food items
per month, 10% was spent on milk and milk products, 8% on cereals and pulses, 2%
on edible oils, 4% on vegetables and 2% on fruits. In absolute figures, a family
— the report says the average household size in Delhi is 4.47 — in rural Delhi
spends about Rs 3,308 on food items out of a total monthly spend of Rs 7,606 and
in urban Delhi about Rs 3,445 out of a total of Rs 9,295.75. Among non-food
items, fuel and light incur the biggest expenditure, coming about Rs 686.32 per
month, followed by education at Rs 585.35 and clothing at Rs 418.50. Conveyance
is a huge drain on a family’s resources, with rural Delhi spending Rs 655.36
(8.61%) per month on it and urban Delhi Rs 763.39 (8.21%) on it.
Courtesy:- Times of India dt:- 06-April-2010 |
| |
| Zuri Group plans Rs 700cr investment in hotels,
realty |
Zuri Group Global, which is present in the
high-end hotel, real estate and floricul- ture sectors, has announced plans to
invest Rs 700 crore in hospitality and real estate ventures. Zuri will invest Rs
400 crore in setting up two five star lux- ury hotels in Bangalore and Nairobi
in Kenya, and Rs 300 crore in its 250-acre premium villa-cum-apartment project
in Goa. “Both the hotels would com- plete within 20 months. The new 160-room
hotel at Bangalore is near the airport and it would be a mix use proj- ect on
six acres,“ said Bobby Kamani, managing director, Zuri Group Global. “We have
started work on the 150-room hotel in Nairobi and we are waiting for final
clear- ances for the villa project in Goa to begin work,“ he said. The group is
backed by a con- sortium of investors from the Middle East and so far has
invested over Rs 900 crore in India. It has properties in India, Kenya and UK,
including four hotels in India which are run under the brand name of Zuri. Apart
from organic growth, Zuri now plans to grow aggres- sively through management
contracts. “Though (we are) very young, hotel owners are coming to us to run
their proj- ects. Two hotels in Sikkim and Kolkata have been finalised while one
in Hyderabad is at an advanced stage,“ said Kamani. “We are very keen to have a
presence in Delhi and Mumbai and are looking for hotels either through
management contracts or outright lease,“ he said. Kamani said Zuri hotels, which
started only last year after taking back properties from foreign hotel chains,
is fast catching up among upwardly mobile corporate executives and visitors, who
seek value for money luxury service. The group, which has 250 hectares of land
in Kenya pro- ducing 150 million roses a year for the export markets of UK and
Dubai, is also expanding its wind energy business in India and geo-thermal
energy busi- ness in Kenya. The group employs over 2,100 people globally
including 1,200 in India and wants to meet its capital investment through a mix
of debt and equity. “We see tremendous busi- ness opportunity here; that is why
my cousin Abhishek and I shifted to India five years back to grow the group's
business. We have seen growth even dur- ing recession and we will invest heavily
as we are impatient to grow,“ said Kamani, who was born and brought up in Kenya.
Courtesy:- HT Business dt:- 06-April-2010 |
| |
| SKY IS THE LIMIT |
| Mumbai flat fetches Rs 36cr |
| Nauzer K Bharucha | TNN |
Mumbai: The city once again seems to have broken
a national record in property transactions, with a duplex in the prime Samudra
Mahal building at Worli fetching in excess of Rs 36 crore in an auction on
Monday. Although people involved in the transaction flatly refused to comment,
TOI has learnt through reliable market sources that the deal worked out to more
than Rs 99,000 a sq ft. The last highest transaction recorded was at the NCPA
Apartment at Nariman Point in 2007 when a flat measuring 3,475 sq ft (super
built-up) was bought by a London-based NRI at a rate of Rs 97,842 a sq ft (Rs 34
crore). The Samudra Mahal duplex is situated on the 19th and 20th floors of the
28-storey, sea-facing highrise. The high net worth individual who won the bid is
the wife of a prominent banker who died sometime ago. The duplex belonged to ABN
Amro bank and the deal was brokered by the London-headquartered real estate
adviser, DTZ. The duplex is spread over a built-up area of 3,640 sq ft and has
four bedrooms and two covered car parks. The building has a swimming pool, a
children’s play area and a small football court. One of the losing bidders said
they walked out once they learnt that the bidding started at Rs 32 crore. ‘‘We
had a budget of only Rs 25 crore,’’ he said. Samudra Mahal is one of the
sought-after residential buildings in the city. One of the occupants of this
building are the Scindias (family of the late Madhavrao Scindia).
Courtesy:- Times of India dt:- 06-April-2010 |
| |
| Paramount Group have recently unveiled their new
project Floraville in Noida |
Paramount Group have recently unveiled their new
project Floraville, which is coming up at Sector 137, Expressway-Noida. The
project aims at providing luxury at affordable prices. Floraville will have 2, 3
and 4 bed room apartments. To make houses affordable, Paramount Group have come
up with 2 BHK of 1045 sq ft and 1240 sq ft, priced at Rs 23.90 lakh and Rs 28.37
lakh respectively, 3 BHK of 1360 sq ft and 1425sq ft priced at Rs 31.11 lakh and
Rs 32.60 lakh respectively and 4BHK flats measuring 1685 sq ft priced at Rs
38.55 lakh. Ashwini Prakash, executive director, Paramount Group, at the launch
function said, “The new era demands an amalgamation of mod- ern amenities,
luxurious living and green environment at affordable prices.“
Courtesy:- HT
Estates dt:- 03-April-2010 |
| |
| Mapsko Group has launched Mapsko Casa Bella, a
Group Housing Project |
| Mapsko Group has launched Mapsko Casa Bella, a
Group Housing Project spread on an area of around 18 acres at Sector 82,
Gurgaon. The group housing has 3, 3(+1), 4(+1) bedrooms of 1690 sq. ft, 1960 sq.
ft., 2535 sq. ft. respectively. The price ranges between Rs. 2,500-2,600 per sq.
ft. Courtesy:- HT Estates dt:- 03-April-2010 |
| |
| Costs may force builders to give up green
buildings |
| It may become difficult for builders to construct
green buildings as they are 25-35 per cent more expensive than normal housing
structures, reveal findings of Grant Thornton and ASSOCHAM. Releasing the
findings of the White Paper, ASSOCHAM presi- dent, Dr Swati Piramal pointed out
that despite the benefits, construct- ing a green building remained a challenge
when it came to the initial capital outlay and immediate returns on investment.
The Paper also points out that considering the changes in global climate, rising
population, pollution, related regulations and also com- mercial concerns
vis-Ã -vis power crisis, running cost and pressure on urban infrastructure, green
practice will become a necessity rather than a matter of choice in the next 10
years. Along with environmental con- cerns, the most obvious objective of
constructing green buildings will be to bring in energy efficient practices,
thus reducing consumption of power and water. However, in the short term, real
estate developers find the s initial cost of deploying energy effi- cient
systems a major hindrance. This is inspite of the fact that real estate and its
ancillary industries account for more than half of the world's energy
consumption. |
| Courtesy:- HT Estates dt:- 03-April-2010 |
| |
| Big but Affordable Apartments |
Developers Keep The
affordability factor in mind Even as they build large-sized apartments
Shikha Sood, a teacher in an international school, bought a two-BHK 1,250 sq ft
apartment for Rs 32 lakh in the NCR in 2007 with some amenities and frills
thrown in. Her colleague, after a long wait, took the plunge and bought a house
during the slowdown. On offer was a 900 sq ft apartment in the same area for Rs
22 lakh. Her sister bought a 1,100 sq ft flat last week in the same area for Rs
27 lakh. That's not all. Suman Singh, a 38-year-old engi- neer, bought a
residential property -- a 1,482 sq ft, three-BHK apartment in the
stilt-plus-four-storey catego- ry at Rs 1,650 per sq ft -- in new Gurgaon in
September last year. His brother-in-law bought a house in December last year
when phase II of the same project was launched. On offer was a 1,516 sq ft,
three-BHK unit, at a rate of Rs 1,550 per sq ft, in the stilt- plus-14-storey
category. These examples are an indication of some interesting trends currently
being wit- nessed in the real estate housing market. They show that while the
sizes of the boom era (2007) may be mak- ing a comeback, the differ- ence this
time is that afford- ability is becoming an increasingly important con-
sideration while planning apartment sizes. Making detailed plans for projects
and doing market research before launching housing products are becoming the
norm. Unlike last year, the attempt now is not to shrink sizes but to make them
sensible. Inching forward The year 2007 saw many projects launched in the mid-
end and high-end categories. The affordable concept caught the fancy of develop-
ers during the slowdown. This year is witnessing launches in the mid-end seg-
ment and sizes are slowly inching towards 2007 levels though the frills are
missing. “There were two things happening last year -- reduc- tion in prices and
reduction in sizes. With prices starting to rise gradually, job security
returning and businesses doing better, the mid-seg- ment and the high-end seg-
ment are back. Affordable housing exists but the new projects cater more to the
mid-segment. House sizes have, therefore, increased and are moving towards 2007
levels,“ says Abhishek Kiran Gupta, head of operations - research and real
estate intelligence, Jones Lang La Salle Meghraj (JLLM), a real estate
consultancy. Also, developers are not experimenting with varia- tions and
modifications in apartment sizes at the pace in which it was happening in 2009.
Though sizes will increase, it will happen in stages, the first trigger being
this Diwali, he adds. If one were to compare the 2007 situation with the pres-
ent, one will find that three years ago consumers went beyond their budget to
buy bigger apartments. Having learnt their lesson during the lowdown, they are
now going for housing products that suit their pockets. Also, if developers are
moving back to 2007 sizes, the same is being done with a greater level of
discretion, study and research. There is greater focus on planning. “If the
brief I gave to my architect then (during 2007) was that I feel like building
`X' product in a particular area because I feel good about it. The brief I give
him now is that these are the conclusions drawn from my demand sur- vey and,
therefore, you need to build product `Y',“ points out Kumar Gera, chairman,
Confederation of Real Estate Developers Associations of India (CREDAI). Varied
offerings Agrees Vidur Bharadwaj, architect and director at the 3Cs group. “In
2007, develop- ers were looking at opulence. Today, the market is not yet ready
for it. Every location will have some percentage of affordable, mid-segment and
high-end apartments. I foresee a mixed bag.“ Concurs Pradeep Varshney, CEO,
Jindal Realty (P) Limited, “In any project you'll find 10-15 per cent of the
two- BHK variant of size 1,250 sq ft, 60-70 per cent of affordable apartments of
sizes 750-1000 sq ft and 15-18 per cent flats of sizes 1,250-2,500 sq ft. “ Size
and densities The size of apartments is not only being driven by market
conditions but by densities provided by the government. According to Amit
Ramani, president, NELSON India, a US-based integrated solutions firm offering
services in archi- tecture and interior design, “Developers are being forced to
bring in all sizes to match and maximise the Floor Area Ratio (FAR).“
Differential pricing A dual pricing trend has also been observed in some proj-
ects. Developers are offering bigger sized apartments in a high-rise at a lower
price band when compared to apart- ments of similar sizes in a low- rise
structure. A case in point is the Crescent ParC project by SARE group in
Gurgaon. The company is offering a 1,314 sq ft three-BHK apartment at Rs 1,650
per sq ft in the stilt-plus- four-floors category. In the stilt-plus-14-floors
category, the company is offering a 1,516 sq ft three-BHK flat with servant
quarters for Rs 1,550 per sq ft. This is because in a low-rise project a
developer tends to lose out on Floor Space Index (FSI), which is the ratio of
the total floor area of buildings to the size of the land. These low- rise
towers are less dense and their FSI is a costly affair and in that sense these
are premi- um towers, points out Sunil Agarwal, chief development and
acquisitions officer, South Asian Real Estate (SARE). According to Priyankar
Bhikshu, DTZ, a global consul- tancy, in 2007, developers managed to increase
cost and realisation but they have now concluded that it cannot hap- pen
sequentially. Therefore, differential pricing has been introduced to keep the
overall affordability under check. Going forward, the trend of bigger-sized
apartments will rise. For each segment, con- sideration of affordability (price
`X' size) will be an inte- gral part of the development process (design to
selling) in the Indian realty market.
Courtesy:- HT Estates dt:- 03-April-2010 |
| |
| Unlike in the past, the New Age Indians
are not confined to investing in residential properties — they are now setting
their sights on commercial property as well, says Vivek Shukla |
| If you imagine that commercial properties are
only purchased by companies to expand their business prospects, think again! Now
high net worth individuals (HNI) too invests in commercial properties. As
recently as a few years ago, commercial property was an investment option for
select individuals. Apart from the issue of a large investment, it required a
different mindset from the investment point of view as well. But, over the
years, a large number of Indians have begun to earn huge salaries while many
others are also making a lot of money through freelance jobs, which they are
investing in commercial properties. Unlike in the past, the New Age Indians are
not confined to investing in residential properties. This trend is picking up
fast. “If banks do not show reluctance to give loans to individuals in order to
buy commercial properties, more and more HNI will come forward to buy commercial
properties. It is now no secret that banks hardly show any positive attitude to
sanction loans to individuals in order to buy commercial properties. This
happens all over the world. That is why you can not blame only our banks,” says
Samir Jasuja, CMD of PropEquity. An official of PNB Housing Finance Ltd also
admitted that while banks happily give loans for residential properties, they
are not that forthcoming when it comes to loans for the purchase of commercial
properties. Reason? He said that compared to residential properties, the rate of
default is very high in this segment. That is precisely the reason banks avoid
disbursing loans to individuals in buying commercial properties. “As far as
Ansal API is concerned, we have got bookings from a sizable number of such
individuals (HNI) in our malls (Ansal Plaza in various locations), as also in
small to medium office spaces in our commercial projects in Delhi NCR, Punjab,
Lucknow, Kundli (near Sonipat in Haryana), among other projects,” says the
company's official spokesman. Anu Gupta, director of Century 21 India, says that
HNIs should make investments in commercial properties as these investments could
maximize their return. The reason being, while they could go for bank loans up
to 75-80% for such investments, the repayment of such loans could be set off
against the rental incomes from such commercial properties. Thus, by investing a
portion of the total price (say 25%), an investor can acquire a high-value
asset, which will not only give maximum return (thanks to the set off provision
in IT against rentals), but could see a significant appreciation over a period
as the retail/commercial industry grows. Giving his own example as to how he is
earning less because he has invested in residential property while his friend is
earning far more than him for investing in commercial property, a Delhi-based
financial professional, Narinder Gambhir, says that both he and his friend
invested in residential and commercial properties in 2004 in East Delhi. Both
invested close to Rs 30 lakh each. “While I am getting a rent of Rs 15,000 per
month, my friend is earning Rs 25,000 from his property. This is a huge
difference,” Gambhir rues. Discussing about the factors which are crucial for
HNI to look before buy commercial properties, a realty expert says that they
should not invest where there is a deluge of supply. In that case, the
investment would not fetch good returns. HNI also invest in commercial property,
as they are not restricted to a dingy market area. Today, swanky malls enable an
individual to look at commercial property as a viable investment option.
Moreover, the emergence of semi-commercial property in residential locations has
made the investment financially viable. R K Arora, CMD of Supertech group, says
that there is nothing wrong if you invest in commercial property, but one must
invest after taking all the pros and cons into consideration. "I feel that if
you invest in some commercial space in NCR, then you have to wait for a long
period before earning anything as there is a massive supply of such commercial
property in NCR, unlike in Delhi. If you can invest in Delhi, then it is great."
However, Alimuddin Rafi Ahmed, CMD of ILD realty group, feels that as our
economy is improving after tiding over a really tough time during the market
slum of 2008-09, corporates are looking for commercial spaces on lease, hence it
is a perfect time to invest in commercial properties. “This is just the right
time to invest as the property is available at rock-bottom prices. The crash in
property prices led to downward revision of prices by developers. The reduction
was to the tune of 30% or so,” Ahmed concludes. Another point in favour of
commercial property is the changing dynamics on the economic front. In bigger
cities, entrepreneurship has been on the rise and this would mean a lot more
individuals would be looking for office space for their business enterprises.
These individuals look for properties which are not commercial, but a mix of
commercial and residential. Do they also get queries from HNI for investment in
their commercial properties or malls? Sunil Jindal, CEO of SVP Developers, says
that they have not dealt with HNI so far as they deal with big brands directly.
“I still suggest HNIs to invest in residential than commercial properties. That
is safe for them. We have noticed that due to over supply of commercial
properties in NCR, they are not fetching enough returns,” says Jindal. And in
the end, Ashish Jindal, head (North) of Knight Frank India, also says that if
you can, then commercial property is a good investment option for investors. The
motive behind such investments should be more rental returns than capital
appreciation. A typical commercial office property can give 8-12% return
depending upon the quality of building and tenant. It’s a good medium to
long-term asset class to have in one's investment portfolio - even for the
salaried class. Courtesy:- Times Property dt:- 03-April-2010 |
| |
| Bigger, brighter and better |
| Suddenly there is no stopping luxury brands,
hotels, retail formats from entering Tier 2 and Tier 3 cities in what may be
bigger and better avatars than even in the metros, finds Namrata Kohli If you
thought ‘mall’ is Greek and Latin to someone in smaller cities and towns you
surely need a reality check. Smaller city folk are not being treated to some
lowbrow ‘country cousin’ version of your metro malls — instead, they are
witnessing much better and bigger developments. Businessmen have smelt the
appetite of locals and are crowding into Tier 2 and Tier 3 cities to encash upon
the firstmover advantage and grab vast plots at reasonable rates (as against the
metros, which suffer from both paucity of land and high real estate costs). The
head of operations of a big retail chain shares his perspective saying that
smaller cities is the way to go for big brands now. Citing an instance, the
industry insider says that when Globus had opened its store at a place like
Varanasi, no one was sure what would happen, but today, the store has
outperformed its Mumbai counterpart. Even the Crossword store in Visakhapatnam
and other small cities in south India are doing great - so much so that a second
outlet has been opened there. Retailers, realtors, hoteliers are now seen
heading to smaller cities which conventionally were not on the organized
business’s radar. Take a look at the 6 lakh sq ft Alpha One mall at Amritsar and
anyone would agree that it has a good mix of international, national and
regional brands available anywhere. The brands include Shoppers Stop, HyperCity,
Fun Cinemas, Orama, Reliance Trends, Standard Max and Lifestyle Max as well as
United Colors of Benetton, Tommy Hilfiger, Levi’s, Provogue, Wrangler, Adidas,
Nike, Reebok, Puma, Blackberry, Zodiac, U.S. Polo, Flying Machine, Planet
Fashion, F2O, Peter England, Mufti, Hidesign, Biba, Arrow, Kap Kids, Catmoss,
Emerge, Lakshita, Woodland, Magnet, VIP, Just Lucky’s, Nu West, Café Coffee Day,
Mothercare, Rockport, Himalaya, VDOT, Fuel-Stop, Metro, The Body Shop, Beverly
Hills Polo Club, Guess, among others. Even luxury hotels have zeroed in on Tier
3 cities. Just imagine, one of the most sought after spas in the country,
Ananda, chose Amritsar to open its only branch at a 5-star luxury hotel, Ista,
which is owned and managed by hospitality chain IHHR. According to Ashwin Handa,
general manager of Ista, “Ista is Amritsar’s only 5-star luxury hotel and we
decided on Amritsar as the city has a huge tourist influx and offers great
potential.” The same logic holds true for mall developers and according to
Pickles Sodhi of Alpha G Corp, “Punjabis like to shop and they like to spend
money and enjoy a good life. My investment in Amritsar was more of a gut
instinct based on the facts, of course, that Amritsar is a huge religious draw —
there is enormous tourist influx and many NRIs frequent this religious
destination. The paucity of a decent mall spelt opportunity. Next, we plan to
target Chandigarh, Jalandhar and Ludhiana. And after that we are readying a 7
lakh sq ft mall at Ahmedabad.” He adds that they have tried to retain the local
flavour by introducing Amritsari bazaar, which will retail Amritsari crafts,
phulkari, etc, and encourage shopping of local goods in sanitized environment.
Fun Cinemas’ Atul Goel feels that small cities are hugely receptive to new
ideas. Fun Cinemas already has multiplexes at Chandigarh, Lucknow, Ahmedabad and
Coimbatore. “We are entering Amritsar with a multiplex which will have the first
gold class in Punjab. Priced within Rs 500 per cover, this 35-seater will
provide endless cold drinks and popcorn to patrons.” Goel adds that they are
trying to tap the aspirational living value of people and showing them a taste
of good life, “once they taste it and learn to enjoy it, they will ask for more
and this way they will grow with us”. North India’s first hypermarket Hypercity
Retail (India) Ltd has opened in Amritsar in Alpha One mall. B S Nagesh,
vice-chairman, explains: “In this vast floorplate of 1.4 lakh sq ft, a shopper
gets everything from the freshest malta to jeans worth Rs 199 to LCD TVs.
Besides, there is a feature called Daily diamonds, which is meant for today’s
women who can pick up their favourite piece of jewellery at price points of Rs
2,000 to Rs 10,000, while shopping for daily groceries. We are here to create
lasting value and we are giving ourselves three years to break even.” But when
retail strikes smaller towns do they replicate their city formats or customize
to the local tastes? Govind Shrikhande, CEO of Shoppers' Stop says that the
stores have similar merchandise albeit with some changes. “We are stocking pagdi
(turbans) and jutti (shoes), as these are important part of the basket of a
shopper in Punjab. Besides, our thrust will be on stocking more casuals than
formal wear since Amritsar is not home to many corporates yet, unlike Delhi or
Mumbai. Also, we would include brighter shades and focus more of traditional
wear.” However, what does not keep pace with these striking private developments
is the poor public infrastructure. There is glaring contrast between public
utilities and private developments and this is evident as soon as you step out
of Alpha One mall and are greeted with poor infrastructure. Says S K Sayal,
director & CEO of Alpha G: Corp: “While making this mall we were faced with
infrastructural bottlenecks like lack of electrification, storm water drainage
system, sewerage system — there is no master plan for these cities. But the
authorities are slowly but surely realizing that infrastructure has to be built
and we would say that one thing is leading to another. The authorities have
built a flyover near the mall and the second one is already being planned near
the Golden Temple.” These private parties, of course with vested interest, are
also doing good in both creating pockets of entertainment for small cities that
lack them, and also bettering the services and utilities in their city of
operation. Courtesy:- Times Property dt:- 03-April-2010 |
| |
| Lifestyle statements in Noida |
Noida is shaping up as one of the most promising
residential and commercial destinations in the NCR, and the Mahagun Group is
adding its signaturestyle developments to the skyline, says Krishna Kumar
Mangalam Mahagun Group has emerged as one of the leading realty players in
Noida, setting standards in the sector with a proven track record of more than
40 years — it has delivered 20 projects with a client base of more than 4,000
families. It has also managed to carve a niche for itself as a reliable brand
with its team of committed and highly experienced engineers and space planners,
and has been delivering on its promises with consistency. Dhiraj Jain, director
of Mahagun Group, says, “Mahagun, with its unblemished track record of handing
over all our projects before the committed dates, and to the complete
satisfaction of our customers, has taken the principle of ‘deliver what you
commit’ to new heights.” “All of our ventures have met with a resounding
success. The foremost reason being our focus on rigid quality and time control.
The company always strives to provide optimal specifications, thereby adding
more value and cutting cost, all of which translate into optimum benefits for
the customers. And the amenities, which the projects boast of, are trendsetters
in their own right,” says Jain. Mahagun has contributed immensely to the
residential segment in Noida, which is developing into a premium residential and
commercial destination in the NCR with top-class connectivity including
expressways and the forthcoming Metro link to its various sectors. “Building on
existing infrastructure and amenities, Mahagun has gone ahead and developed
masterpieces in the form of premium, top of the line residential projects.
Transforming the skyline of Noida are the various Mahagun creations,” says Jain.
Mahagun offers luxurious residential options in the choicest of sectors of the
city. “And with Mahagun there are no shortcuts to success. Each project is
meticulously planned to perfection, right down to the minutest details.
Penthouses, duplex apartments or opulent multiple bedroom apartments, Mahagun
has established unassailable benchmarks in each category,” says Jain. All
Mahagun projects are designed by the renowned architect Hafeez Contractor. An
amalgamation of all the prime features, namely luxury, comfort and prime
location, Mahagun projects have been extremely well received by customers — be
it Mahagun Manor, Mahagun Villa, Mahagun Mosaic, Mahagun Mascot, Mahagun Maple,
Mahagun Puram, Mahagun Maestro, Mahagun Mansion, or Mahagun Morpheus — all the
ventures have been instant sellouts. Mahagun also has a commercial
establishment, the Mahagun Metro Mall, which is a unique combination of a
shopping mall, serviced apartment hotel and a multiplex. Mahagun is also a part
of the prestigious Crossings Township project, which is India's first global
city. Mahagun Maestro, a quality residential complex located in a prime location
of Noida, is a showcase of the group’s creations. Built on land allotted by the
Noida Authority, 80% of its area has been allocated for ‘green’ spaces. Equipped
with all the Mahagun standard features like earthquake-resistant RCC structure,
vaastu and ecofriendly layout, assured timely possession with penalty clause,
ample parking space, power backup, and rainwater harvesting it showcases some
unique features too. Each tower has a luxurious entrance lobby for example. As
one walks into the apartments, you are surrounded by Indo-Italian marble,
chandeliers, designer light fittings, woodwork, among other such fittings and
fixtures. Mahagun Morpheus, also located in Noida, is built along the same
lines. It too bears Mahagun’s signature style of huge spaces. Each tower here
has a musical entrance lobby, which lends a soothing and pleasant ambience to
the whole place. With only three apartments on each floor, with a common waiting
area, there is no sense of claustrophobia. The interiors have been designed with
teak woodwork and designer light and bath fittings, high-grade marble and
chandeliers, giving the entire setting an impression of being in a castle. The
club house is studded with state-of-the-art facilities — swimming pool,
gymnasium, squash court, steam and sauna bath, Jacuzzi, etc. “At Mahagun, we are
creating new models of luxury and changing the scene of real estate block by
block,” says Jain. Apart from many landmark projects, the group has a very
promising 4-star luxury hotel on the anvil, at Karkardooma in Delhi. After
delivering several projects in Noida, Mahagun recently launched the Mahagun
Maple, which is at an advanced stage of construction and has been fully sold
out. To bolster its brand and presence in Noida, Mahagun is soon going to launch
a megaresidential project here with quite a few other projects also lined up on
the drawing board.
Courtesy:- Times Property dt:- 03-April-2010 |
| |
| Choose tenure based on age, income and loan
amount Kavita Sriram has some tips to help you arrive at the tenure best-suited
to you |
Tenure is the period or duration for which a loan
amount is sanctioned. Borrowers might feel like taking the shortest possible
loan tenure ideally. However, do not rush for the shortest loan tenure. It may
appear enticing to pay off your home loan debt in the shortest possible time
span. However, a short tenure loan translates into very high EMI dues month
after month. The borrower must remember that he has other financial commitments
- usual monthly expenses - and must not stop saving during the repayment period.
So, what is the ideal loan tenure? Consider different EMI outflows for various
loan tenures. Will you be comfortable paying the EMI, yet have enough to meet
all other financial commitments and emergencies? Freeze on the tenure for which
you can pay the EMIs without a major financial stress. Consider these parameters
before deciding on the loan tenure: Is the amount high? If the homeowner has
borrowed a huge sum of money, the EMI outflow would be high. Hence, to make EMI
repayment comfortable, the borrower may have to go for longer loan tenure.
Longer the loan tenure, lesser is the EMI outflow. Consider a loan of Rs 50
lakhs borrowed at 12 percent interest. If the tenure is 15 years, the EMI
outflow would come to around Rs 60,000. If the loan amount was lesser, say Rs 25
lakhs at 12 percent interest, the EMI outflow for a tenure of 15 years would be
around Rs 30,000. If the borrower can afford to take a shorter tenure loan, of
say 10 years, his EMI outflow would be around Rs. 36,000. Purpose of buying
property If the borrower has purchased the property solely as an investment, he
would like to sell it off when he gets a good deal. In such cases, most buyers
prefer to keep the loan tenure as short as possible. This way they need not pay
any penalties towards prepayment or exiting the loan before end of tenure. Those
who have purchased the property only to live in it may prefer longer loan
tenures. They may not be very keen on a very short loan tenure. Further, they
benefit from tax deductions on their home loans. However, borrowers must keep in
mind that longer the loan tenure, greater is the associated cost of borrowing.
Age of borrower A person close to his retirement years will not be eligible for
a long tenure loan. A middle aged person who is making good money may prefer
repaying the loan before he retires. A young borrower who has recently started
working may not bring home a huge income. His income level may go up as the
years pass by. He should opt for a longer loan tenure as he has many years ahead
to work and clear his debt. Income A person with greater disposable income can
pay off his debt faster than a person who earns lesser. If the borrower has
higher income, he can pay higher EMIs and clear his debts faster. A person
having greater financial commitments, other debts or a lower income may find
repaying his debt a big challenge. A borrower's current income level and
expected increase in income are factors that can influence the loan tenure.
Interest rate fluctuations are difficult to predict. The impact of increase in
interest rates could be hard if the borrowed amount is high. Whenever you have
excess funds, partially prepay the loan. This way, a borrower can clear his debt
faster.
Courtesy:- Times Property dt:- 03-April-2010 |
| |
| Bull and Bears |
|
Among major sectors Real Estate is also
continuing to perform well on sensex and nifty from early 2004 and also builder
are selling new projects on the name of affordable housing insubrubs of metro
cities, tier I and tier II cities but from last two months seeing slow on sensex
and nifty but selling of project is good
Big real estate company showed better results in last quarter in respect of last
year same quarter and loss also picked up money from private equity players
through. QIP (Qualified Institutional Placement) and reduced their debts.
Private Equity Players also learned handsome amounts. In case of Unitech,
India’s second real estate company by market capitalization was placed its share
with ---@ 40 in last year and this time is stable with @ to plus with high Rs
95+ in Dec 2009 from low Rs 25-40 in Mar 2009
On the operational front for the Dec 2009 quarter, the company
has been able to record revenue growth of 76% year on year to Rs 774 crore
largely on sales which have occurred in the previous fiscal
The company is focusing on affordable homes and expects the segments contribute
about half of the overall volumes in 2010-11 about 16 million sq. ft and also
focusing on Mumbai were It has tied up with Mumbai-based developers for slum
rehabitation projects and expecting to will sell 40 millon sq. ft area.
The company is now standing on a debt of Rs 6200 cr. I.e. debt to equity ratio
is 0.3 times
The company also hived off its non-core businesses like power, telecom, hotels
and SEZ’s to improve sentiments towards the stocks |
| |
| Bottom-Fishing with Caution |
The market has been recovering from the meltdown,
but a few stocks are languishing at lower levels. Some of these stocks can turn
out to be good bets for the long run.
In the advanced stages of any rally, experts often dig much deeper to find
stocks, which still can provide some value to investors. With frontline stocks
already factoring in one or two years of expected growth, the focus shifts to
stocks, which have not done well over the course of the rally. There could be
many reasons for some stocks to languish during the rally. The first and the
simplest is that they are simply off the investor’s radar. The other reason
could be that their financial performance is wanting. Whatever may be the
reason, one thing is for sure that there is an eye keenly going over the stock
charts and finding out which of these stocks, can be a good investment. Seizing
these opportunity, ET Intelligence Group analysed the stocks,
which haven’t done well ever since the current rally started on March 09, 2009
to find out if there are good value picks for investors.
And we didn’t have to dig deep to find, as leading stocks of the FMCG sector –
Hindustan Unilever (HUL) & Britannia - have been gross
underperformers over the course of the past one year. HUL, in fact, didn’t move
at all during the year. HUL it has underperformed most of its smaller peers
since the past four consecutive quarters. Its performance is also way below its
own track record also. For instance, its current operating margin of 14% is
lower than its own peak margin of 18%(achieved in 2002) and below than other
FMCG players, such as Nestle and Dabur that
have operating margins of 19% and 17%, respectively. Rising competition has
become a double-edged sword, as it has not only eaten into HUL’s market share,
but has also made it necessary for the company to spend more on advertisement.
Much like HUL, Britannia too fared poorly vis-Ã -vis its peers, such as Dabur and
Marico. If Britannia’s stock price fared poorly compared to Sensex, its
performance was equally subdued. The spiralling cost of wheat and sugar, key
ingredients for the company, has adversely impacted its bottomline. Rising
commodity prices amidst inflationary conditions are likely to be major hurdles
for the company to deliver growth in earnings. Since the near-term prospects of
both HUL and Britannia look bleak, investors are advised to stay away from them
even though they are available at seemingly reasonable valuations.
Similarly, oil marketing companies (OMC) are facing tough operating environment.
All three of them - Indian Oil, BPCL and HPCL,
have grossly under performed the market over the past one year due to their
continuing inability to control their profitability. They face a peculiar
predicament as they can’t decide the selling price of most of their products
despite rising costs. What is more, they can’t even curtail their sales even if
higher sales lead to higher losses. In the meantime, the government has cut down
on its aids to OMCs for selling products below cost. These three companies,
which have launched expansion projects that may be dubbed as ambitious
considering their cash generation capacity are likely to become debt-ridden,
unless some bold decisions are made. The government’s past attempts at bringing
in reforms in the oil industry have failed miserably. Investors should shun
these stocks too even though they are available at bargain prices.
Bargain hunters may, however, find value in the power sectors with the country’s
two largest utilities-NTPC and Power Grid-
available at significant discount to their peers. While NTPC’s stock price, the
country’s largest power generator, has suffered due to a delay in the
commissioning of new projects due to various issues; Power Grid stock continues
to languish despite a robust financial performance by the company in the first
quarter of FY 10. However, the recent lull in NTPC earnings growth is about to
end as it recently commissioned a 490 MW units in Delhi and is expected to
augment its product capacity by nearly 60% in a phased manner by the end of FY
13. This will not only double the company’s revenues and net profit but would
also improve its return ratios such as return on equity (RoE) and return on
capital employed (RoCE), which suffered in the past two years due to a sharp
increase in capital expenditure. The stock is currently trading at just 19 times
its trailing net profit. In contrast, its peers, such as Tata Power
and Neyveli Lignite are trading in the range of 30-40 times.
This makes it a value buy for long-term investors though immediate gains may be
difficult.
Power Grid is working on equally big capacity expansion and
implementing projects, which will nearly double its transmission capacity by 60%
in the next three years. This will help maintain earnings momentum in the near
to medium term. Power transmission is a highly scalable business, and once a
project gets commissioned, operating profit can be as high as 90% with hardly
any operational risks. At its current price, Power Grid is down nearly 18% from
its 52-week peak and looks undervalued with a price-to-earning multiple of 21x
and looks a safe bet for investors.
Then there are stocks, which seem to be poised to yield good returns for their
shareholders going forward. For instance, Koutons Retail’s
stock price has largly remained flat in the current rally. This is despite the
factors like improved inventory management, lesser markdowns and higher volumes
have enabled this retailer to post a 16% growth in its profit in the nine months
ended December 2009. Moreover, the company is expected to gain from ladies and
kids segment, which have higher margins. On the other hand, improved inventory
management will result in lesser working capital thereby improving the cash
flows. Given the expected improvement in financial, Koutons Retail can be a good
bet for investors at current levels.
Similarly, investors can take a sigh of relief as far as India Cements
is concerned. It has been one of the worst performing stocks due to a tough
operating environment in its markets in Tamil Nadu, Andhra Pradesh and
Karnataka. The region is facing a glut in cement supply, which has depressed
prices. However, worst seems to be over for the company. In May last year, the
company opened a grinding unit in central Maharashtra to lessen it independence
on South India and enter central and west India where cement prices remained
firm. The stock is currently trading at just 1.2 times its book value. In
contrast, most of its peers are trading at 2-5 times their book value. At this
level, a lot of bad news is already factored into the stock price, and any
improvement in financial may lead to a rally in the stock’s price.
Similarly, industrial cylinder manufacturer Everest Kanto Cylinders
(EKC) had a disastrous run till now, as its consolidated profit fell by 76% in
the nine months ended December 2009. The company is facing pressures of high
cost inventory. However, it is expected to get a breather as its 3-lakh units
per annum plant in Kandla SEZ is expected to commission operating soon. The
profitability of EKC’s subsidiaries has drastically come down, particular those
in the UAE and US, while the newly acquired subsidiary in Kolkata, which holds
marketing rights for ONGC’s coal-bed-methane block in Jharkhand, is yet to begin
operations. However, this situation is likely to improve in the near future with
demand picking up and company getting rid of its high cost raw material
inventory. So, investors can make use of the current fall in stock price by
investing in the stock
Another stock, which has not done well of late but can be a good potential
investment, is EIH. The hospitability major is trading at a
significant discount to its rival- Indian Hotels. Indian Hotels. While EIH is
trading at a price-to-earnings (P/E) multiple of 48, Indian Hotels is trading at
a P/E of 78. This is despite the fact that EIH is known for lesser capital
dilution compared to its peers. The advantage of lesser capital dilution is that
its growth is fuelled by only internal accruals and not through more money from
stakeholders. As a result, its return on capital employed is much higher than
Indian Hotels. So, at current levels even EIH could be a good buy for investors.
Further the country’s largest non-basmati rice producer Lakshmi Energy
and Foods is trading at P/E of 8, while industry P/E is 10.5. This is
regardless of the fact that the company’s performance in the quarter ended
December 2009 was above the market expectations. Recently, it has ventured into
power generation from biomass and selling of branded rice to retail, thereby
safeguarding itself from the cyclically of the sector. No doubt, the stock is
not adequately priced at current valuations, which means retails investors can
take exposure to the stock.
As it seems from the analysis, not every battered stock is a good bet at current
levels. Investors should exercise caution and invest wisely in those companies,
which are going to show some recovery in fundamentals. |
|
VITAL STATISTICS |
| |
CMP
(Rs) |
Mar 9 '09
(Rs)* |
Chg
%^ |
Sensex
Chg %# |
Underperformance
(%)** |
|
BPCL |
521.3 |
353.4 |
47.5 |
115.4 |
-67.9 |
|
Britannia Industries |
1585.5 |
1230 |
28.9 |
115.4 |
-86.5 |
|
EIH |
121 |
94.3 |
28.3 |
115.4 |
-87.1 |
|
HPCL |
320.8 |
256 |
25.3 |
115.4 |
-90.1 |
|
Hindustan Unilever |
228.6 |
216.5 |
5.6 |
115.4 |
-109.8 |
|
India Cements |
127.7 |
96.7 |
32.1 |
115.4 |
-83.4 |
|
Indian Oil Corporation |
301.8 |
203.5 |
48.3 |
115.4 |
-67.1 |
|
Koutons Retail |
342.7 |
347.2 |
-1.3 |
115.4 |
-116.7 |
|
Lakshmi Energy & foods |
123.5 |
99.6 |
24 |
115.4 |
-91.4 |
|
NTPC |
202.8 |
176.5 |
14.9 |
115.4 |
-100.5 |
|
Power Grid Corporation |
108.3 |
90.7 |
19.4 |
115.4 |
-96 |
|
*March 9 '09 was when the current rally had started |
|
^ it shows the percentage change in the stock price since the rally had
started |
|
# it shows the percentage change in Sensex since the rally had started |
|
**it shows the difference between stock price change and Sensex change |
|
| Courtesy: ET – 22-03-2010 |
| |
| |
| 100 Years On, Govt Reworks Property Registration
Rules |
Proposed Legislation Is Likely To Recognise
Electronic Stamping and Online Payment of Stamp Duties
Registering a property could soon be painless affair with the government
planning to replace the century-old Indian Stamp Act, 1899 with a simpler law
that will do away with a large number of antiquated provisions and fees.
The finance ministry has already kicked off a preliminary exercise for drafting
the new law and is hopeful of finalising it by the end of the year. The draft
will also be discussed with state governments to elicit their views before a
final decision is taken, government officials familiar with the development
said.
“The current law was written more than 100 years ago. Since then the form of
business and transactions have completely changed and we feel that there is a
need to replace the Act,” said a senior government official.
Stamp duty is levied on a number of financial and legal transactions. At
present, the documents are physically verified by different departments, making
the process of registration a time-consuming activity. The new legislation is
expected to address some of these issues.
The proposed legislation is likely to recognize electronic stamping and
electronic payment of stamp duties. At present, the facility is available as
part of the MAC 21 e-governance initiatives for companies that wish to file
their papers online with the Registrar of Companies.
The legislation could also allow payment of duty on instruments and court fees
through modes like demand drafts and bankers’ cheques, which are not permitted
under the existing law.
“The emphasis has now shifted to e-governance and such a provision will make it
easier for citizens to adhere to laws and be much more convenient than the
physical act of buying and pasting stamps,” the official said, requesting
anonymity.
The provision could also help reduce the leakage of revenue because of stamp
duty frauds, he said.
The government is also planning to rework the current structure of stamp duty
fees and penalties. Duties charged in the smaller denomination and often,
obsolete paisa would be replaced with rupees or be calculated as a percentage.
Significantly, the Law Commission, led by Justice AR Lakshmanan, had suo moto
taken up the issue of amending the Indian Stamp Act last year. It had suggested
in its report that the required fee for any transaction or court fee should be
paid by demand draft, cash, postal order, banker’s cheque rather than through
non-judicial stamp papers or special stamps.
Courtesy:- ET dt: 20-March-2010 |
| |
| A WEEKLY SNAPSHOT OF SOME BIG-TICKET CITY DEALS |
MUMBAI
A residential apartment spread across an area of 5,800 sq ft was sold at a total
value of Rs 12,52,37,500 at Lower Parel in Central Mumbai. The apartment
features a plunge pool and a terrace garden, while the complex offers a club
house, along with other amenities. This under–construction high-end apartment
commanded an average capital value of Rs 21,500 per sq ft and will be ready for
possession in 34 months. The commanded range for ready apartments in this area
is Rs 34,000 – 55,000 per sq ft. Lower Parel is likely to witness an increase in
the number of new project launches for high end as well as mid-ranged projects
over the next three to six months.
PUNE
An apartment covering an area of 2,800 sq ft in Kalyani Nagar was leased out to
a corporate for a rental of Rs 1.6 lakh per month. This rental for this high-end
apartment was well within the commanded range of Rs 1,10,000 – 2,10,000. It
happens to be amongst the most sought after buildings in the expat community.
While prices in this micro-market have remained stable over the past two
quarters, they are expected to appreciate on account of the growing demand from
expatriates and corporates, mainly due to its proximity to the airport, railway
station as well as the central business district.
CHENNAI
A beach house spread across 3500 sq ft, located on the East Coast Road was
leased for a monthly rental value of Rs 1.75 lakh. This apart, another apartment
admeasuring 3500 sq ft at Boat Club was leased out for a rental of Rs 1.4 lakh
per month. This highend apartment’s rental is well within the prevalent range of
Rs 80,000–2,25,000 per month. Properties on the East Coast Road, which are
closer to the city limits, have been witnessing a buoyant demand in the recent
past.
BANGALORE
An apartment covering an area of 3,000 sq ft was sold at a total value of Rs
2,24,00,000 in the highly sought-after Koramangala area. This high-end apartment
commanded an average capital value of close to Rs 7,466 per sq ft, which is well
within the commanded range of Rs 6000– 8500 per sq ft in the locality. A villa
in Whitefield, spread across 4,000 sq ft, was sold for a total cost of Rs
1,75,00,000. This high-end villa commanded an average capital value of Rs 4,375
per sq ft, which was below the prevalent range of Rs 5,600– 7,000 per sq ft. The
demand in the city of Bangalore has been largely driven by affordable housing
projects and smaller sized-apartments.
Cushman & Wakefield, a commercial real estate services firm with offices
worldwide, delivers solutions including advising, implementing and managing on
behalf of landlords, tenants, and investors.
Courtesy: - 19-03-2010 |
| |
| BUDGET BLUES FOR THE REALTY SECTOR |
Service tax burden imposed by the Union Budget on
realty transactions will affect the sector. Read on to know what are the pluses
and the minuses of the new budget
The Union Budget 2010-11 is a big disappointment to the middle-class urban
housing sector. However, it has bet on the economic growth to drive demand in
the sector. By tweaking the income slab, finance minister Pranab Mukherjee has
put some extra money into the pocket of middle-class tax payers. A person having
an income of Rs 5 lakh per annum is likely to gain Rs 20,600 per annum from the
provision. But, if his income is more than Rs 8 lakh, his annual gains will be
around Rs 51,500. These are a big booster to the economy as they will increase
the purchasing capacity of individuals. Ultimately, tax saving is equivalent to
money earned.
Service tax on apartments under construction
But at the same time, the finance minister has imposed service taxes on a number
of services related to the real estate sector. Anshuman Magzine, MD of global
consultancy firm CBRE Asia, says that these provisions will be a dampener and
affect the revival of the real estate sector. Another realty consultancy firm,
Knight Frank also said that it would affect the sector adversely. According to a
budget provision, in cases where a property under construction is bought and a
consumer makes payment over a period of time, then it will attract service tax.
"In the 'Construction of complex service', it is being provided that unless the
entire consideration for the property is paid after the completion of
construction (that is, after receipt of completion certificate from the
competent authority), the activity of construction would be deemed to be a
taxable service provided by the builder/promoter/developer to the prospective
buyer and the service tax would be charged accordingly," reads the provision.
A senior tax consultant of KPMG says that this clearly means that if a house or
apartment is sold before the completion of the construction, a buyer will have
to pay the service tax. In fact, Sunil Mitra, revenue secretary, said that even
if a house is already sold but the completion certificate could be secured from
the concerned authority in 2010-11 or after March 31, 2010, the service tax
would be levied on such transaction. According to tax experts, this will lead to
a tax outgo of 3.4% of the sale value of the house. Mitra also confirmed that
the department would allow an abatement of 67% on the value of house to
calculate the service tax at the rate of 10.3%.
This means, if you have bought a house for Rs 50 lakh at the time of launch of a
project, your tax liability would be Rs 1.70 lakh. However, with the service tax
levied from service provider, a senior builder said they would pass on the
liability to the customer. He said that since they have started launching
affordable apartments, the margin is so thin that they would not be able to
absorb them. The budget has also included the renting of immovable property
under the service tax net. Knight Frank says that this will have a negative
impact on the real estate sector. The levy of service tax will impact rented
commercial property with retrospective effect from June 1, 2007. Even in cases
where a developer takes land on lease and pays lease rent, the lease rent will
attract service tax.
Preferred location will be taxed
Interestingly, the differential charges for higher floor, or for preferential
view, better spaces, etc will also attract service tax. "Certain additional
services provided by a builder to prospective buyers like providing preferential
location or external or internal development of complexes on extra charges.
However, service of providing vehicle-parking space would not be subjected to
tax," the new provision says. However, there are some positive aspects also,
which will benefit the construction sector as a whole.
Hotel industry gets a boost
According to a new provision, all new hotels of 2-star and above category will
be benefited because of the investment-linked deduction - 100% of the capital
expenditure incurred by a hotel can be reduced from taxable income. This will
enhance the returns for developers of hotel projects, says Knight Frank. "The
provision will enable investments in the hospitality segment and boost supply in
the organized sector. It aims to provide support to the hospitality sector in
expectation of growth in tourism and both business and leisure travel," says
Anurag Mathur, MD of Cushman & Wakefield India.
Relief under 80 IB
The budget has also given relief to developers under Section 80 IB (10). It has
provided the extension of income tax exemption for housing projects by one year.
It will give a relief to projects that were delayed during the slump. These
projects should have been sanctioned on or before March 31, 2008 and be
completed in five years. Similarly, the provision for commercial establishments
has been increased from 5% or 2,000 sq ft of built-up area, whichever is less,
to 3% or 5,000 sq ft of built-up area, whichever is higher. Therefore, at least
5,000 sq ft of shop establishments can now be developed in these projects while
continuing to remain eligible for income tax exemption, says Knight Frank.
The relief to developers by allowing extension for claiming deduction of their
profits within a period of five years under the section, says Mathur, would help
those developers who were impacted by the global financial crisis last year.
This announcement is likely to provide a breather for developers who were
finding it difficult to complete projects due to liquidity crunch.
However, on the other hand, the announcement may be a cause of concern for the
consumer/end user as relief extended to developers might result in further delay
in project completion.
In addition, it is suggested that the norms for built-up area of shops and other
commercial establishment in housing projects will be relaxed to enable basic
facilities for the residents.
Courtesy:- ET Realty dt:- 19-03-2010 |
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| HNI INVESTING IN COMMERCIAL PROPERTIES |
Unlike in the past, the New Age Indians are not
confined to investing in residential properties. They are now setting their
sights on commercial property as well. Read on to know what attracts them to
commercial properties
If you imagine that commercial properties are only purchased by companies to
expand their business prospects, think again! Now high net worth individuals
(HNI) too invests in commercial properties. As recently as a few years ago,
commercial property was an investment option for select individuals. Apart from
the issue of a large investment, it required a different mindset from the
investment point of view as well. But, over the years, a large number of Indians
have begun to earn huge salaries while many others are also making a lot of
money through freelance jobs, which they are investing in commercial properties.
Unlike in the past, the New Age Indians are not confined to investing in
residential properties. This trend is picking up fast. "If banks do not show
reluctance to give loans to individuals in order to buy commercial properties,
more and more HNI will come forward to buy commercial properties. It is now no
secret that banks hardly show any positive attitude to sanction loans to
individuals in order to buy commercial properties. This happens all over the
world. That is why you cannot blame only our banks," says Samir Jasuja, CMD of
PropEquity.
An official of PNB Housing Finance Ltd also admitted that while banks happily
give loans for residential properties, they are not that forthcoming when it
comes to loans for the purchase of commercial properties. Reason? He said that
compared to residential properties, the rate of default is very high in this
segment. That is precisely the reason banks avoid disbursing loans to
individuals in buying commercial properties.
"As far as Ansal API is concerned, we have got bookings from a sizable number of
such individuals (HNI) in our malls (Ansal Plaza in various locations), as also
in small to medium office spaces in our commercial projects in Delhi NCR,
Punjab, Lucknow, Kundli (near Sonipat in Haryana), among other projects," says
the company's official spokesman.
Anu Gupta, director of Century 21 India, says that HNIs should make investments
in commercial properties as these investments could maximize their return. The
reason being, while they could go for bank loans up to 75-80% for such
investments, the repayment of such loans could be set off against the rental
incomes from such commercial properties. Thus, by investing a portion of the
total price (say 25%), an investor can acquire a high-value asset, which will
not only give maximum return (thanks to the set off provision in IT against
rentals), but could see a significant appreciation over a period as the
retail/commercial industry grows.
Giving his own example as to how he is earning less because he has invested in
residential property while his friend is earning far more than him for investing
in commercial property, a Delhi based financial professional, Narinder Gambhir,
says that both he and his friend invested in residential and commercial
properties in 2004 in East Delhi. Both invested close to Rs 30 lakh each. "While
I am getting a rent of Rs 15,000 per month, my friend is earning Rs 25,000 from
his property. This is a huge difference," Gambhir rues.
Discussing about the factors which are crucial for HNI to look before buy
commercial properties, a realty expert says that they should not invest where
there is a deluge of supply. In that case, the investment would not fetch good
returns. HNI also invest in commercial property, as they are not restricted to a
dingy market area. Today, swanky malls enable an individual to look at
commercial property as a viable investment option. Moreover, the emergence of
semi-commercial property in residential locations has made the investment
financially viable.
RK Arora, CMD of Supertech group, says that there is nothing wrong if you invest
in commercial property, but one must invest after taking all the pros and cons
into consideration. "I feel that if you invest in some commercial space in NCR,
then you have to wait for a long period before earning anything as there is a
massive supply of such commercial property in NCR, unlike in Delhi. If you can
invest in Delhi, then it is great."
However, Alimuddin Rafi Ahmed, CMD of ILD realty group, feels that as our
economy is improving after tiding over a really tough time during the market
slum of 2008-09, corporates are looking for commercial spaces on lease, hence it
is a perfect time to invest in commercial properties. "This is just the right
time to invest as the property is available at rockbottom prices. The crash in
property prices led to downward revision of prices by developers. The reduction
was to the tune of 30% or so. Hope things go better in the times to come and
everyone benefits from the property," Ahmed concludes.
Courtesy:- ET Realty dt:- 19-03-2010 |
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| News Headlines |
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| Norwegian major yesterday has released last
fourth installment of Rs 2000cr of Unitech wireless and increased his stake up
to 67.25% and rest with Unitech but Telenor has got approach from Indian
regulator to increase its stake up to 74% but it has no plans to hikes its
holdings from current 67.25.ich will be applicable on all under construction
properties. At one side the government talks about promoting affordable housing
and at the same time making this tax applicable would only make these houses
more expensive, which is ironic. Increase in excise duty from eight per cent to
10 per cent, means increase in the price of raw material, w |
| REAL ESTATE: SOME LIKE IT ‘OUGHT,
SOME LIKE IT SOLD. SOME LIKE IT IN THE FINANCING POT, NINE EMIS OLD -- SOME POST
B BLUES |
| |
Did Pranab Mukherjee get it right this time
according to our real estate players? Pallavee Dhaundiyal Panthry spoke to real
estate developers about their opinion on the subject and their industry.
Paradigm shift or run-of-the-mill?f low cost housing in the rural and semi-urban
area. Five years extension in the time-limit for completion of projects eligible
for deduction under section 80-IB and extension of one per cent interest
subvention for low cost housing to 31.03.2011 along with increase in the IT slab
rates for individuals would boost demand for budget homes. Proposed service-tax
at 10.3 per cent on the value of additional services provided by the builder and
lease of vacant land (if construction is undertaken thereon) would make the cost
of home dearer to the buyer. Imposition of service tax on rentals with
retrospective effect from 1st June 2007 would cost one percent to 1.25 per cent
of the retailer's turnover, which is neither in the interest of the owner of the
commercial space nor the retailer using that space.
Talking from the developers' perspective, developers undertaking low cost high
volume mass housing projects will be benefitted. Investment-linked tax holiday
for all new hotels in the two-star plus categories would help developers
undertaking hospitality projects.
But applicability of service tax as detailed above and increased indirect taxes
on raw materials such as steel and cement will increase the end cost and project
costs would go up by four to five per cent, which would adversely affect the
developers. This may not be a good sign for the times to come for this industry.
Anyway, we have to make the best of the good points from this.
R K ARORA, CHAIRMAN & MANAGING DIRECTOR,
SUPERTECH
The budget, this year talks of both positive and negative aspects for the real
estate developers as well as the buyers. There is a revision in personal income
tax slabs, which will strengthen the purchasing power of the buyers affecting
the demand of the residential sector. The common man will also be benefited by
the continued subsidy of one per cent for affordable housing loans, which will
help this sector to grow. On the other hand, a two per cent increase in excise
duty of cement and steel might not prove profitable for the real estate
developers as the cost of construction would be expensive which will ultimately
result in the increased cost of the project and hence the buyers will be
affected. Also, it would have been a great support to the real estate sector if
Section 80I (B) would have been renewed to thrive the demand of affordable
housing.
ABHISHECK LODHA, MANAGING DIRECTOR, LODHA DEVELOPERS
The finance minister has taken a pro-active measure by reducing the income tax
burden on the middle class and hence, increasing disposable income and
consequently leading to increased demand for consumables and housing. The focus
on development of infrastructure is crucial as the world is looking at India as
an important member of the global community. While there are no major
initiatives for real estate, the lack of extension of 80 IB benefits to new
projects started after March 2008 is a missed opportunity, since it would have
led to creation of large volumes of affordable housing for the "Aam Aadmi' and
also spurred economic growth due to strong cross industry linkages of the
construction chain. We hope that the intent of the government to continue the
economic momentum through a combination of consumption growth and fiscal
discipline will be further enhanced through the coming year by concrete
initiatives on increasing productivity in our country - this would ensure that
the goal of double digit growth rates is achieved soon.
ANIL KUMAR SHARMA, CHAIRMAN & MANAGING DIRECTOR, AMRAPALI GROUP
While extending measured benefits to the realtors, the proposed budget visions
its commitment to promote "Aam Aadmi" housing by proposing major allocations for
it. Developers and real estate companies, however, were looking for much more
than what the finance minister had to offer. The real-estate sector is all about
demand and supply. In India, demand far outstrips supply. Budget 2010 is
positive, balanced and growth oriented. By raising the exemption limits in the
income tax, the government has sought to financially empower the consumers,
which would boost real estate sales. Although government has increased the cost
of raw material, yet the budget this time can be viewed in a positive way. The
industry will witness an upsurge shortly marking a benchmark of recovery from
the ongoing worldwide recession as the government has sought to financially
empower the consumers, which would boost real estate sales.
AMAR AMBANI, VICE PRESIDENT RESEARCH, INDIA INFOLINE LTD
One major devil in the budget detail is for the real estate sector. Service tax
has been levied on additional services provided by a builder to buyers like
preferential location, internal and external development of complexes (except
vehicle parking). Furthermore, unless the entire consideration for a property is
paid after completion of construction, the construction activity will be charged
service tax. Renting of property, rent of vacant land under agreement to
undertake construction of building or other structures will be charged service
tax -- a drag on the bottom-line.
MANISH PERIWAL, CHAIRMAN & MANAGING DIRECTOR, PIONEER URBAN LAND AND
INFRASTRUCTURE
The Government has treaded a line of fine balance to lead the economy to high
GDP growth rate by investing in infrastructure sector, yet keeping the fiscal
deficit within manageable limits which has already undergone a substantial
deviation at 6.8 per cent from 6.1 per cent at the time of interim budget. In
the backdrop of ambitious 'housing for all' and `Slum free India' agenda, the
rural and urban housing sectors have been given importance, largely through
Government's flagship programmes rather than the incentives real estate
companies were hoping for. We feel investment in infrastructure will have a
cascading impact on the residential and commercial projects as the development
foot print can expand. The concessions in Direct Taxes on the salaried class
should have a positive impact on the mid to premium residential housing segment
in which we operate. But launched projects will suffer as the top line is locked
and thin margins will erode further. The buyer will be impacted.
Courtesy:- FT dt:- 07-Mar-2010 |
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Recovery in realty
Recovery in NCR and Mumbai is a definite precursor to the expected trends in
2010, a report says, but cautions that it would be premature to predict a
bounce-back for the entire sector. Prabhakar Sinha writes Residential markets
across major cities of India have seen significant appreciation in values
towards the close of 2009. This trend is most prominent in NCR and Mumbai, the
two key residential markets in India, where values in Oct-Dec 2009 appreciated,
compared to the same period the year before, says Cushman and Wakefield in a
report. The report said that recovery in NCR and Mumbai is a definite precursor
to the expected trends in 2010. However, it would be premature, the report adds,
to predict a bounce-back for the entire sector. The other markets which are
still witnessing some correction are expected to stabilize only in the next 3-6
months. These are expected to see positive signs of recovery by the middle of
this year, when values across the board would stabilize but will remain within
acceptable range. The average increase in capital values in various
micro-markets in these two metro areas has been in the range of 3 % to 25% over
the previous year, the report shows (see chart). Most micro-markets in these two
cities have recorded stable to appreciating capital values over the last quarter
as well. NCR and Mumbai have shown a faster recovery than other cities due to
the fact that these are high-demand markets, both from end users and investors,
who were holding back their requirements as a result of economic slowdown, which
created a kind of uncertainty in the job markets. The best outcome of the
slowdown is the emergence of affordable housing in the country. At the same
time, the strong recovery in the economy led to sharp upward correction in the
capital values for mid-ranged housing due to the quantum of demand and
affordability. Certain broad trends that were noticed across cities were that
peripheral and the suburban markets witnessed the highest correction but were
also one of the first markets to bounce back, C&W says. Another shift in the
trend is the rise in demands for properties under construction. The report said,
there was a clear shift towards ready to-move-in properties during the beginning
of the year, when there was uncertainty on the capability of a developer to
complete a project. But that has receded now resulting in a rise in risk
appetite for properties under construction. In the NCR region, demand for
affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood
from the fact that a number of projects completely sold out within a couple of
days of their launches. Recently, in Noida, Supertech, which launched apartments
for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could
sell around 500 apartments in a couple of days. The new trend has led to
increase in the volume of transactions. Supertech CMD, R K Arora, says that the
developers have now shifted to high-volume business from high margin ones.
However, he also pointed out that this became possible because of the relaxation
in the density norms (number of apartments allowed to be constructed on a given
area). Therefore, the construction activities are set to rise in 2010. Due to
focus by developers in 2006 and 2007 on luxury housing, high-end properties in
most cities suffered a steep correction when slowdown impacted the sector, as
compared to mid-end properties. This left a large unmet demand in the mid-end
market. As favourable conditions have come back, the sector has witnessed
resurgence of demand. However, for the trend to continue, the government should
not put extra burden on it. The budget announcement of 10.3% service tax on the
sale of apartments before completion is expected to have the highest impact in
the real estate market. This may hamper the attractiveness of the projects under
construction. The scope of service tax is extended to the construction of
complex service, wherein the developer/builder is likely to pay service tax on
construction services while the project is under construction. The levy would
cover all construction of complex service or commercial or industrial
construction services resulting in higher cost of properties under construction.
The service tax of 10.3% will be levied and also be charged on additional
services provided in residential developments such as preferential location
charges, internal or external development charges, etc. It is estimated that
service tax of 10.3% will be levied on approximately 33% of the value of an
apartment, which is likely to escalate the price of real estate and put further
pressure on the housing affordability. In the short term, the report says, real
estate prices across most cities are expected to continue to strengthen.
However, it also warns that a significant increase could result in demand drying
up and lead to stagnation or further correction. Rental values are expected to
remain stagnant, especially in the luxury/high-end segment with certain mid-end
properties witnessing buoyancy. Developers are likely to remain cautious and
launch new projects at attractive price points, the report says. Due to
prevalent demand for mid-income housing, most developers are expected to focus
on new projects in this category, over short- to medium-term, with very few
niche projects in luxury category with strong differentiation factors.
Courtesy:- TP dt:-13-Mar-2010 | | |
SERVICE TAX MAY TAKE TOLL ON
REALTY
After many months in the dumps, the housing
sector was finally sniffing at a recovery as buyers returned gradually, lured by
sharp price cuts and teaser loans. But a Budget proposal to levy service tax on
houses under construction is threatening to crimp the sector’s fragile recovery
as the resultant price hike is certain to dissuade fresh buyers. The proposal, a
bolt from the blue, purported to spur builders into completing projects faster
after rampant complaints of long delays. Though that remains to be seen, an
immediate effect will be the prices of incomplete houses rising by 3% after a
service tax of 10.3%, including surcharge, is imposed. The levy is based on an
earlier Income Tax Department circular, held up due to resistance from
developers, which set 33% of the house price as services. Housing project
comprises land, raw material, labor and services. Though services include
branding and selling of a project, there is an unwritten understanding that no
‘service’ was being provided till a developer passed a property title to a
buyer. Back-of the- envelope calculations show that an Rs 30-lakh housing
property will see a price hike of at least Rs 1 lakh after the service tax is
affected. “Affordable housing will be impacted the worst,” said Niranjan
Hiranandani, chairman of Mumbai-based developer Hiranandani Constructions,
adding that everyone in that category must now pay developers in installments.
The Budget proposal, coming after the Reserve Bank of India’s incessant frowning
on teaser loans, will wane demand further, say realty watchers. Most houses are
typically sold during construction with buyers paying in phases. The Budget
proposal means that even buyers who have to pay, say, the remaining 5% of the
overall cost during possession, will have to cough up more. The proposal could
also pose problems in calculating remaining payments though it will ratchet up
demand for ready-to-move properties, say realty watchers. As for developers, the
market’s response to the proposal will determine their long-term plans.
“Affordable housing will now become unaffordable,” said Rajeev Talwar, managing
director of DLF, the country’s largest developer. “Housing is a state subject
and the move is impinging.” Real estate was among the worst hit sectors in the
global downturn as buyers kept away and banks became wary of lending. But teaser
loans, some even as low as 8.25% much below their prime lending rate (PLR), last
year stalled the decline. But builders fear that the introduction of a service
tax and absence of teaser loans will compound the problem of oversupply of
residential and commercial properties in several parts of the country.
Courtesy:- ET dt:- 04-Mar-2010 |
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DLF CONVERTS MUMBAI MALL
PROJECT INTO RESIDENTIAL ONE
DLF, the country’s largest realtor by market
value, is planning to build a premium residential apartment complex at Worli in
Mumbai instead of a high-end mall project, as demand for retail spaces has come
down sharply, according to a company executive. “We felt residential will do
well here, and we will fix the price depending on market conditions,” he said.
According to DLF website, the project is under “planning and development” under
the high-end mall brand Emporio. Rents of retail spaces are down by 25-30 per
cent from their peak in 2007-08 as demand slowed. Though demand for office
spaces have picked up slowly, property consultants expect lukewarm demand to
continue for retail developments. Worli, which was a former hub of textile
mills, is witnessing modern office developments by realtors such as Indiabulls,
Bombay Dyeing and Century Textiles, and residential apartments command a price
of Rs 22,000 per sq ft and above. DLF made news in 2005 when it bought a 17-acre
Mumbai Textile Mill land from National Textile Corporation (NTC) for Rs 702
crore. The company at that time announced it would build a futuristic
retail-cum-entertainment complex on the land. The new project is expected to be
launched in the next four-five months after taking all the necessary approvals,
the executive said. According to property consultants, the company changed the
plan several times as real estate market went through a prolonged slowdown.
However, DLF is not alone which converted its mall project into a residential
one. Host of others such as DB Realty in Dahisar area of Mumbai, West Pioneer in
Kalyan near Mumbai and TTK group in Bangalore also changed their plans to build
mall to apartment projects. Apartment prices have raised 15-20 per cent since
mid-2009 as home buyers returned to the market. Earlier, prices had declined by
around 40 per cent as home buyers stayed away. Buoyed by response for its
apartment projects, DLF is expected to launch 8-10 new residential projects in
the next one year, according to sources. DLF, which stalled some of its office
projects during the slowdown, is planning to launch two-three commercial
projects in Gurgaon and Hyderabad. DLF today sold 1,200 units of independent
floors in its Panchkula Valley housing project in Chandigarh within a week of
its launch. The units were priced between Rs 30 lakh to Rs 60 lakh. The company
is aid to have made around Rs 500 crore from the sale of units. The company
originally planned to launch 500 units, but later increased it to 1200 due to
good response, a release from the company said. The project was launched on Feb
18, 2010. The company, which had plans to book these units in 45 days till March
31, 2010, closed bookings within seven days of launch as the bookings crossed
1200 units within 15 days.
Courtesy:- BS dt:- 26-feb-2010 |
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US NEW HOME SALES FALL IN DEC
FOR 2ND MONTH IN A ROW
Sales of newly built US single-family homes
fell unexpectedly in December, data showed on Wednesday, the latest indication
that the government-led housing recovery might be losing some steam. The
Commerce Department said sales fell 7.6% to a 342,000 unit annual rate from an
upwardly revised 370,000 units in November. It was the second straight month
that new home sales declined. US stock indexes fell on the data, while
government bond prices held at higher levels. “This isn’t good news. It should
put some pressure on the market, especially coming after the disappointing
outlooks we saw,” said Dan Cook, senior market analyst at IG Markets in Chicago.
New home sales for the whole of 2009 fell 22.9% to a record low 374,000 units,
the department said. The data came as the Federal Reserve deliberated on
monetary policy. The US central bank is expected to leave overnight lending
rates near zero. At its meeting in December, the Fed announced it would end
purchases of agency mortgage-backed securities in March. The program has
depressed mortgage rates, contributing to the housing market’s healing in recent
months. But the housing market recovery is showing some signs of fatigue after a
surge in sales as first-time buyers rushed to take advantage of a popular tax
credit, which had been scheduled to expire in November. It has since been
expanded and extended until June this year and while analysts expect home sales
to pick up as a result, they reckon the pace will not be as strong as witnessed
with the initial tax credit.
Courtesy:- ET dt:- 28-jan-2010 |
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