In a bid to restore confidence in its dented property market, property developers in Dubai are urging the government to re-consider its visa policy for foreigners.
“The market is in bad shape and needs to be rescued. Buying and selling has nearly stopped. Even although prices are coming down investors are not buying,” said Kabir Mulchandani, chairman, Dynasty Zarooni.
Although the real estate sector has allowed freehold ownership of property since 2002, it suspended the issuing of residence visas to property owners earlier this year and if this decision was reversed it could encourage more buyers, it is claimed.
The developers want a return to the commitment given in 2002 to facilitate three-year renewable residence visas to expatriate property owners, to encourage foreign investment.
“The government should stand firm on its commitment to issue visas for freehold properties, both residential and commercial. They should alleviate people's fears and apprehensions by positively reinforcing the freehold visas rule,” said Syed Mohammad Ali, chief executive of Fortune Group.
”The confusion on this issue has negatively impacted the Dubai realty sector. A constant communication regarding the visas structures should be given to the public,” Ali added.
Tarek Ramadan, chairman of Tharaa Holding, said the government needs to rescue the real estate market. “It should re-introduce the property visa,” Ramadan said.
Ramadan also called for emergency funds to stop prices plummeting, for more liquidity and flexibility in payment across the value chain to give the real estate community some breathing time.
Wednesday, December 31, 2008
Emirates Gardens development on schedule
Dubai-based Damac Properties has announced the completion of the main structure of its Emirates Gardens development.
Emirates Garden (phase one) is the company's first project in Jumeirah Village and comprises three separate buildings each of four storeys. The contracting company Intermass has completed the structure as well as the MEP and finishes for each of the complexes.
Work has already commenced on plastering, tiling and wiring. In addition, work to install elevators has also begun.
Peter Riddoch, CEO of Damac Properties, said: "This will be our first project to be completed in Jumeirah Village so to see the completion of the structures in the first phase is a significant milestone for us. We are also making good progress on the second phase of Emirates Gardens with our other three buildings all at, or past, the third floor. We are working closely with our contractors on site to ensure that this positive progress continues on site."
The three buildings in the first phase (named Gardenia, Lavender and Rose) are due for completion in third quarter of 2009 with the second phase due to follow shortly afterwards. The developer has a number of projects under construction at Jumeirah Village including the recently launched Green Park development and Tuscan Residence.
Emirates Garden (phase one) is the company's first project in Jumeirah Village and comprises three separate buildings each of four storeys. The contracting company Intermass has completed the structure as well as the MEP and finishes for each of the complexes.
Work has already commenced on plastering, tiling and wiring. In addition, work to install elevators has also begun.
Peter Riddoch, CEO of Damac Properties, said: "This will be our first project to be completed in Jumeirah Village so to see the completion of the structures in the first phase is a significant milestone for us. We are also making good progress on the second phase of Emirates Gardens with our other three buildings all at, or past, the third floor. We are working closely with our contractors on site to ensure that this positive progress continues on site."
The three buildings in the first phase (named Gardenia, Lavender and Rose) are due for completion in third quarter of 2009 with the second phase due to follow shortly afterwards. The developer has a number of projects under construction at Jumeirah Village including the recently launched Green Park development and Tuscan Residence.
Sold 70% of Ajman Uptown project : Sweet Homes
Sweet Homes, a UAE-based developer, has announced that it has sold out 70 per cent of its DH3 billion ($545 million) Ajman Uptown project, despite a 40 per cent hike in property prices in Ajman in 2008.
The announcement follows a GCC-wide roadshow organised by the company and is in line with the developer's two billion dirham investment plan for 2008.
Company chiefs said the strong sales reflected the vibrancy of Ajman’s real estate industry and the appeal of Ajman Uptown, which comprises of seven commercial and residential towers, a hotel and hotel apartments complex, and villas and townhouses.
Reports also indicate that investments into Ajman’s property sector have crossed the DH400 billion mark this year.
While other parts of the UAE suffers, Ajman is experiencing a property boom due to its investor-friendly property laws and reasonable project rates, with the emirate having attracted significant foreign direct investment (FDI), which has exceeded the rest of the other emirates by 300 per cent.
“As the third largest property market in the UAE, Ajman is strategically positioned to attract more foreign investments into the real estate sector, with over 33 per cent of development projects in the area owned by expatriates, as compared to 11 per cent in other emirates," said Fahad Sattar Dero, CEO, Sweet Homes Group.
With offices in the UAE, Oman and Qatar, Sweet Homes continues to undertake regional awareness campaigns and participate in high profile promotional activities, such as its ongoing participation as a major sponsor for the Doha Shopping Festival.
Scheduled for completion by 2010, Ajman Uptown will also feature a school, a healthcare centre, a fire fighting station, several mosques, a health and recreation club, a swimming pool, markets, shopping mall, hotel & hotel apartments, and convenient and spacious parks.
The announcement follows a GCC-wide roadshow organised by the company and is in line with the developer's two billion dirham investment plan for 2008.
Company chiefs said the strong sales reflected the vibrancy of Ajman’s real estate industry and the appeal of Ajman Uptown, which comprises of seven commercial and residential towers, a hotel and hotel apartments complex, and villas and townhouses.
Reports also indicate that investments into Ajman’s property sector have crossed the DH400 billion mark this year.
While other parts of the UAE suffers, Ajman is experiencing a property boom due to its investor-friendly property laws and reasonable project rates, with the emirate having attracted significant foreign direct investment (FDI), which has exceeded the rest of the other emirates by 300 per cent.
“As the third largest property market in the UAE, Ajman is strategically positioned to attract more foreign investments into the real estate sector, with over 33 per cent of development projects in the area owned by expatriates, as compared to 11 per cent in other emirates," said Fahad Sattar Dero, CEO, Sweet Homes Group.
With offices in the UAE, Oman and Qatar, Sweet Homes continues to undertake regional awareness campaigns and participate in high profile promotional activities, such as its ongoing participation as a major sponsor for the Doha Shopping Festival.
Scheduled for completion by 2010, Ajman Uptown will also feature a school, a healthcare centre, a fire fighting station, several mosques, a health and recreation club, a swimming pool, markets, shopping mall, hotel & hotel apartments, and convenient and spacious parks.
Oversupply in commercial real estate likely to continue in 2009: Cushman & Wakefield
The over-supply scenario that 2008 had witnessed in the commercial real estate space could well continue in 2009, says the annual year-end report by Cushman & Wakefield, real estate services firm.
While some companies, which had committed to larger spaces earlier, have scaled down their absorption as a prudent step to mitigate the cost on real estate others, which had taken up space based on anticipated expansion plans, are considering sub-leasing the excess space.
“With this trend continuing in the coming year, coupled with the additional proposed supply and the already existing increasing vacancy levels, the over supply situation is likely to see no early respite. Hence, rental corrections across micro-markets seem probable over the short term,” said Kaustuv Roy, director (tenant strategies and solutions), Cushman & Wakefield.
The south, central and select suburban locations of Mumbai witnessed rental correction over the year and more recently, Thane Belapur Road (IT) and Malad (non-IT) too recorded a southward movement. Vashi and the non IT-projects in Thane Belapur Road recorded a stable trend. Central and suburban locations of Lower Parel, Bandra-Kurla, Andheri and Powai are likely to witness a further fall in rentals with all other major markets expected to stabilise.
In Bangalore, the rental market continued to strengthen recording 4-9 per cent annual appreciation in the peripheral locations and nearly 18 per cent year-on-year growth in the CBD and off-CBD regions. Outer Ring Road and the suburban areas are likely to strengthen further in the coming months, whereas ITPB, Whitefield and Electronics City are expected to stabilise, the report said.
Chennai witnessed a drop of 5-10 per cent in rentals in the in the CBD and off-CBD locations of T. Nagar, Alwarpet, Anna Salai and Radhakrishnan Salai, while the suburban and peripheral regions witnessed a 7-9 per cent drop.
Rajiv Gandhi Salai in the peripheries is the only market in the city that has begun to show signs of stabilisation and is likely to continue with the trend as all other major micro markets are anticipated to record a further fall in rentals, the report added.
In Hyderabad, the CBD, off-CBD regions such as Banjara Hills, Begumpet, Raj Bhavan Road, SP Road and the peripheral regions of Pocharam and Shamshabad recorded a 6-19 per cent annual appreciation in rentals, while the suburban regions of Madhapur, Gachibowli-Nanakramguda, Manikonda and Raidurga witnessed a 5 per cent fall. Banjara Hills, Jubilee Hills, Bachupally and Uppal have also recorded a fall in rental values.
Rentals in the National Capital Region dropped between 1 and 13 per cent from last year across micro markets, with Noida (IT SEZ) recording about 32 per cent annual depreciation. Over the last quarter, rentals recorded 6-16 per cent dip with the likelihood of a further correction in the months to come.
Though rentals in Pune seem to have appreciated over the last year, the last two quarters recorded a 4-10 per cent dip across locations with the exception of Sholapur Road and Hinjewadi in the peripheries that remained stable and are expected to continue remaining so. All other major micro markets in the city are likely to witness a fall in rentals over the short term.
While some companies, which had committed to larger spaces earlier, have scaled down their absorption as a prudent step to mitigate the cost on real estate others, which had taken up space based on anticipated expansion plans, are considering sub-leasing the excess space.
“With this trend continuing in the coming year, coupled with the additional proposed supply and the already existing increasing vacancy levels, the over supply situation is likely to see no early respite. Hence, rental corrections across micro-markets seem probable over the short term,” said Kaustuv Roy, director (tenant strategies and solutions), Cushman & Wakefield.
The south, central and select suburban locations of Mumbai witnessed rental correction over the year and more recently, Thane Belapur Road (IT) and Malad (non-IT) too recorded a southward movement. Vashi and the non IT-projects in Thane Belapur Road recorded a stable trend. Central and suburban locations of Lower Parel, Bandra-Kurla, Andheri and Powai are likely to witness a further fall in rentals with all other major markets expected to stabilise.
In Bangalore, the rental market continued to strengthen recording 4-9 per cent annual appreciation in the peripheral locations and nearly 18 per cent year-on-year growth in the CBD and off-CBD regions. Outer Ring Road and the suburban areas are likely to strengthen further in the coming months, whereas ITPB, Whitefield and Electronics City are expected to stabilise, the report said.
Chennai witnessed a drop of 5-10 per cent in rentals in the in the CBD and off-CBD locations of T. Nagar, Alwarpet, Anna Salai and Radhakrishnan Salai, while the suburban and peripheral regions witnessed a 7-9 per cent drop.
Rajiv Gandhi Salai in the peripheries is the only market in the city that has begun to show signs of stabilisation and is likely to continue with the trend as all other major micro markets are anticipated to record a further fall in rentals, the report added.
In Hyderabad, the CBD, off-CBD regions such as Banjara Hills, Begumpet, Raj Bhavan Road, SP Road and the peripheral regions of Pocharam and Shamshabad recorded a 6-19 per cent annual appreciation in rentals, while the suburban regions of Madhapur, Gachibowli-Nanakramguda, Manikonda and Raidurga witnessed a 5 per cent fall. Banjara Hills, Jubilee Hills, Bachupally and Uppal have also recorded a fall in rental values.
Rentals in the National Capital Region dropped between 1 and 13 per cent from last year across micro markets, with Noida (IT SEZ) recording about 32 per cent annual depreciation. Over the last quarter, rentals recorded 6-16 per cent dip with the likelihood of a further correction in the months to come.
Though rentals in Pune seem to have appreciated over the last year, the last two quarters recorded a 4-10 per cent dip across locations with the exception of Sholapur Road and Hinjewadi in the peripheries that remained stable and are expected to continue remaining so. All other major micro markets in the city are likely to witness a fall in rentals over the short term.
MIDC is looking for acquiring huge tracts of land for its various projects
At a time when demand for industrial land is declining due to the financial slowdown, the Maharashtra Industrial Development Corporation (MIDC) is looking for acquiring huge tracts of land for its various projects.
“We are taking the opportunity of the economic slowdown to sharpen our land acquisition policy. It will be more inclusive and pro-farmer,” an official from MIDC said.
The official admitted that there is a 50 per cent fall in enquiries for setting up new units in the state, given the global economic recession. The official said improving infrastructure like power availability, roads, effluent treatment plants were high on the priority list.
Land acquisition, however, is still going on, with the MIDC currently negotiating for 1,400 hectares at Chakan near Pune. This includes land for MIDC-Bharat Forge SEZ. Meanwhile, the payment process is on for the 600 acres of land it acquired at Jalna.
“We are taking the opportunity of the economic slowdown to sharpen our land acquisition policy. It will be more inclusive and pro-farmer,” an official from MIDC said.
The official admitted that there is a 50 per cent fall in enquiries for setting up new units in the state, given the global economic recession. The official said improving infrastructure like power availability, roads, effluent treatment plants were high on the priority list.
Land acquisition, however, is still going on, with the MIDC currently negotiating for 1,400 hectares at Chakan near Pune. This includes land for MIDC-Bharat Forge SEZ. Meanwhile, the payment process is on for the 600 acres of land it acquired at Jalna.
Real estate prices in Maharashtra may fall further
Indicative property rates, based on which Maharashtra levies its stamp duty in Mumbai and other key cities of the state, may fall marginally for the first time in about a decade as real estate transactions drop, according to sources in the revenue ministry.
The property rates in the ready reckoner for Mahrashtra may drop marginally reflecting the subdued sentiments, sources said. A final decision may be taken tomorrow.
The property ready reckoner is prepared by the office of the inspector general of registration and stamp duties (IGR) on the basis of transactions in real estate sector in respective areas.
Property prices across key cities of the state have witnessed a decline owing to an economic slowdown that has forced companies to curb expansion plans. Reflecting depressed sentiments property, transactions have also dipped as buyers anticipate a further softening of prices.
Still, the assurance given by minister of state for revenue Rana Jagjit Singh in the state legislature to maintain status quo has created a piquant situation. Pune-based Maharashtra Lawyers Association’s President M P Bendre this week filed a petition in the Bombay
High Court requesting the court to direct the state government to publish rates that reflect the market sentiments. The petition pointed out that the assurance given by Singh amounts to injustice to consumers.
The property rates in the ready reckoner for Mahrashtra may drop marginally reflecting the subdued sentiments, sources said. A final decision may be taken tomorrow.
The property ready reckoner is prepared by the office of the inspector general of registration and stamp duties (IGR) on the basis of transactions in real estate sector in respective areas.
Property prices across key cities of the state have witnessed a decline owing to an economic slowdown that has forced companies to curb expansion plans. Reflecting depressed sentiments property, transactions have also dipped as buyers anticipate a further softening of prices.
Still, the assurance given by minister of state for revenue Rana Jagjit Singh in the state legislature to maintain status quo has created a piquant situation. Pune-based Maharashtra Lawyers Association’s President M P Bendre this week filed a petition in the Bombay
High Court requesting the court to direct the state government to publish rates that reflect the market sentiments. The petition pointed out that the assurance given by Singh amounts to injustice to consumers.
SAS could be back in Bangalore
The Karnataka cabinet sub-committee has recommended re-introduction of area based property tax system similar to the SAS (Self Assessment Scheme) introduced in the year 2000 for Bangalore Mahanagara Palike (BMP) areas.
Through this revised SAS, BMP plans to collect tax from 1.5 million houses to the tune of Rs 600 crore for the year 2008-09. In 2007-08, the BMP had collected Rs 350 crore as property tax. The cabinet sub-committee, headed by R Ashok, who is also the transport and Bangalore district in-charge minister, which was constituted to implement property tax scheme for BMP areas has recommended bringing back SAS.
With this, the proposed Capital Value System, for which an Ordinance was passed during the President’s rule last year, will be put in the cold storage. There are about 650,000 houses in old areas, 550,000 in new areas and 450,000 unauthorised houses in new areas.
Through this revised SAS, BMP plans to collect tax from 1.5 million houses to the tune of Rs 600 crore for the year 2008-09. In 2007-08, the BMP had collected Rs 350 crore as property tax. The cabinet sub-committee, headed by R Ashok, who is also the transport and Bangalore district in-charge minister, which was constituted to implement property tax scheme for BMP areas has recommended bringing back SAS.
With this, the proposed Capital Value System, for which an Ordinance was passed during the President’s rule last year, will be put in the cold storage. There are about 650,000 houses in old areas, 550,000 in new areas and 450,000 unauthorised houses in new areas.
Himachal govt considers satellite towns to check urban migration
Himachal Pradesh government has initiated a process to set up satellite townships at Dharamsala and Mandi to check rural population from moving to cities and to disperse urban populace from the congested towns. A proposal to set up new housing colonies at Theog and Pateog in Shimla district, Bhatolikhurd and Sansiwala in Solan district, Una and Rakkar in Una district, Dhaundi in Mandi district, Katyar, Palampur in Kangra district, Tikkaloharda in Hamirpur district and Bhatyat in Bilaspur district is being considered by the government.
The state government has identified land measuring 439 bighas while another chunk of 828 bighas has been identified near airport at Dharamsala. Similarly, government land of 602 bigha and 1,722-bigha private land has been identified at village Nasloh near Mandi for setting up of satellite townships. The government has also acquired 670 bigha of land at Kullu Jhanda near Baddi for setting up of education hub. Planning for Rs 28.26-crore project has already been finalised with 10 plots allotted to different educational institutions.
Official sources in the Himachal Pradesh Urban Development Authority (HIMUDA) said the authority has been entrusted the vital task to develop housing colonies at various places in the state. The authority is constructing houses under different housing schemes like social housing schemes, self-financing schemes and rental housing schemes for state government employees and police personnel.
The state government has identified land measuring 439 bighas while another chunk of 828 bighas has been identified near airport at Dharamsala. Similarly, government land of 602 bigha and 1,722-bigha private land has been identified at village Nasloh near Mandi for setting up of satellite townships. The government has also acquired 670 bigha of land at Kullu Jhanda near Baddi for setting up of education hub. Planning for Rs 28.26-crore project has already been finalised with 10 plots allotted to different educational institutions.
Official sources in the Himachal Pradesh Urban Development Authority (HIMUDA) said the authority has been entrusted the vital task to develop housing colonies at various places in the state. The authority is constructing houses under different housing schemes like social housing schemes, self-financing schemes and rental housing schemes for state government employees and police personnel.
RBI should cut key rates by another 100 bps, says Kamath
Forecasting that inflation is inching towards zero, ICICI Bank MD and CEO K V Kamath suggested that the Reserve Bank of India (RBI) should further cut key policy rates by 100 basis points to usher in a low-interest rate regime.
“Let us start by cutting them (repo and reverse repo rates) by 1 per cent or so, and see what happens,” Kamath said, when asked what his advise would be for RBI to reverse the slowdown.
“It would be in everybody’s interest to work interest rates down. Inflation is clearly moving towards zero. It is the right time to work on this front now. The economy thrives in a low-interest rate scenario. By the time inflation comes to zero or near zero, we have interest rates down to where we wanted...So I think use repo and reverse repo in small measures and see what they do to interest rates,” Kamath said.
Inflation has nearly halved from the peak of 12.91 per cent in August.
RBI, Kamath said, could give further fillip to interest rates so that the benefits could be passed on to both industry as well as consumers. Appropriate signals through cut in key policy rates, he said, would “indeed bring down the rates from where they are today”.
Since October, RBI has reduced repo rate by 250 basis points and the reserve repo rate by 100 basis points to 6.5 per cent and 5 per cent, respectively, signalling a soft interest rate regime.
“Let us start by cutting them (repo and reverse repo rates) by 1 per cent or so, and see what happens,” Kamath said, when asked what his advise would be for RBI to reverse the slowdown.
“It would be in everybody’s interest to work interest rates down. Inflation is clearly moving towards zero. It is the right time to work on this front now. The economy thrives in a low-interest rate scenario. By the time inflation comes to zero or near zero, we have interest rates down to where we wanted...So I think use repo and reverse repo in small measures and see what they do to interest rates,” Kamath said.
Inflation has nearly halved from the peak of 12.91 per cent in August.
RBI, Kamath said, could give further fillip to interest rates so that the benefits could be passed on to both industry as well as consumers. Appropriate signals through cut in key policy rates, he said, would “indeed bring down the rates from where they are today”.
Since October, RBI has reduced repo rate by 250 basis points and the reserve repo rate by 100 basis points to 6.5 per cent and 5 per cent, respectively, signalling a soft interest rate regime.
HFCs plan to cut rates on sub-Rs 20 lakh loans
New home loan borrowers, with a loan size of less than Rs 20 lakh, may get cheaper loans from institutional lenders from January 1, 2009.
Following the leaders, second-rung HFCs like Dewan Housing Finance (DHFL), GIC Housing Finance (GICHF), DHFL Vysya Housing Finance, among others are likely to reduce interest rates by 1-1.5 percentage points compared to their existing rates for loans up to Rs 20 lakh. These lenders also plan to reduce rates for existing borrowers, albeit by a lesser extent.
GICHF, with a home loan portfolio of Rs 2,800 crore, has decided to reduce interest rates by 1-1.5 percentage points for fresh borrowers. Accordingly, for loans below Rs 20 lakh, it will charge 10.25 per cent per annum for 5-15 years and 10.5 per cent per annum for over 15 years.
DHFL, with a home loan portfolio of around Rs 5,000 crore, is yet to finalise its plan. Going by information trickling in, it may offer special rates, too, for the both sub-Rs 20 lakh and sub-Rs 5 lakh loan categories. Its subsidiary, DHFL Vysya Housing Finance, also plans to introduce special rates for new home loan takers.
These players have taken the cue from public sector banks and the market leader Housing Development Finance Corporation (HDFC). Following the government’s diktat, public sector banks have created a concession rate of 9.25 per cent for home loans below Rs 20 lakh and 8.5 per cent for loans less than Rs 5 lakh. HDFC has announced a floating interest rate of 10.25 per cent for loans up to Rs 20 lakh and 11.25 per cent for loans above Rs 20 lakh.
National Housing Bank (NHB), which offers refinance support to HFCs, has introduced a special Rs 4,000 crore refinance facility at 8 per cent annual rate. It has also announced a Rs 2,000-crore refinance support for loans against rural housing projects. “As we will get refinance from NHB at easy terms, we have decided to pass on the benefit to new customers from January 1,” said M Sivaraman, managing director, GICHF.
Industry players, however, believe that NHB facility would be available only against fresh lending. So, the benefit of the soft rates will be limited to fresh loans. GICHF, for instance, will reduce its interest rates for existing customers by 0.25 percentage points.
According to DHFL Vysya Housing Finance managing director R Nambirajan, the company will cut its rates by 0.5 percentage points for existing borrowers across the spectrum. “Besides offering the special refinance scheme, NHB has reduced its normal refinance rates too. Both the moves will help lowering interest rates,” Nambirajan said.
“As we have reduced rates, we also expect HFCs to reduce rates and pass on the benefits to end-customers,” said S Sridhar, CMD, NHB.
Following the leaders, second-rung HFCs like Dewan Housing Finance (DHFL), GIC Housing Finance (GICHF), DHFL Vysya Housing Finance, among others are likely to reduce interest rates by 1-1.5 percentage points compared to their existing rates for loans up to Rs 20 lakh. These lenders also plan to reduce rates for existing borrowers, albeit by a lesser extent.
GICHF, with a home loan portfolio of Rs 2,800 crore, has decided to reduce interest rates by 1-1.5 percentage points for fresh borrowers. Accordingly, for loans below Rs 20 lakh, it will charge 10.25 per cent per annum for 5-15 years and 10.5 per cent per annum for over 15 years.
DHFL, with a home loan portfolio of around Rs 5,000 crore, is yet to finalise its plan. Going by information trickling in, it may offer special rates, too, for the both sub-Rs 20 lakh and sub-Rs 5 lakh loan categories. Its subsidiary, DHFL Vysya Housing Finance, also plans to introduce special rates for new home loan takers.
These players have taken the cue from public sector banks and the market leader Housing Development Finance Corporation (HDFC). Following the government’s diktat, public sector banks have created a concession rate of 9.25 per cent for home loans below Rs 20 lakh and 8.5 per cent for loans less than Rs 5 lakh. HDFC has announced a floating interest rate of 10.25 per cent for loans up to Rs 20 lakh and 11.25 per cent for loans above Rs 20 lakh.
National Housing Bank (NHB), which offers refinance support to HFCs, has introduced a special Rs 4,000 crore refinance facility at 8 per cent annual rate. It has also announced a Rs 2,000-crore refinance support for loans against rural housing projects. “As we will get refinance from NHB at easy terms, we have decided to pass on the benefit to new customers from January 1,” said M Sivaraman, managing director, GICHF.
Industry players, however, believe that NHB facility would be available only against fresh lending. So, the benefit of the soft rates will be limited to fresh loans. GICHF, for instance, will reduce its interest rates for existing customers by 0.25 percentage points.
According to DHFL Vysya Housing Finance managing director R Nambirajan, the company will cut its rates by 0.5 percentage points for existing borrowers across the spectrum. “Besides offering the special refinance scheme, NHB has reduced its normal refinance rates too. Both the moves will help lowering interest rates,” Nambirajan said.
“As we have reduced rates, we also expect HFCs to reduce rates and pass on the benefits to end-customers,” said S Sridhar, CMD, NHB.
Rate cuts expected by home finance firms
National Housing Bank (NHB) said it expects housing finance companies (HFCs) to reduce interest rates in the coming days.
“As we have reduced rates, we expect housing finance companies to reduce too and pass on the benefits to consumers. Many housing finance companies have already reduced rates by 50-75 basis points. I expect them to cut rates further,” said S Sridhar, chairman and managing director, NHB.
NHB extends refinance for rural housing projects at 8 per cent, while for other sections, the rate varies between 9 per cent and 9.5 per cent. It has also reduced its prime lending rate (PLR) by 50 basis points to 10.75 per cent.
Following the series of measures, the two largest housing finance companies -- HDFC and LIC Housing Finance -- have lowered interest rates. Earlier this month, HDFC lowered its retail PLR by 50 basis points to 14.50 per cent, while LIC Housing Finance said it would cut its offer rate by 175 basis points to 9.75 per cent for loans up to Rs 20 lakh with a tenure of more than five years.
Sridhar also said that NHB is planning to raise Rs 3,000 crore, mostly through bonds, by June 2009. NHB had raised nearly Rs 7,800 crore in the first half of the year. In addition, the Reserve Bank of India (RBI) had granted it a refinance facility of Rs 4,000 crore.
“Our fund-raising plans will depend on demand. We are also getting Rs 4,000 crore refinance facility from RBI. We could be raising Rs 3,000 crore by June 2009. Our last borrowing was 10 days ago, which was a zero coupon bond, with effective interest rate of eight per cent,” Sridhar said.
NHB is also pushing reverse mortgage scheme and expects to finalise tie-up with insurance companies before the launch of a new annuity product for senior citizens.
“We are in talks with major insurance companies for the new product,” Sridhar said, while referring to the restructuring of reverse mortgage.
Sridhar said NHB was hopeful of extending the tenure of loan to senior citizens under reverse mortgage to their entire lifetime from 20 years at present.
“As we have reduced rates, we expect housing finance companies to reduce too and pass on the benefits to consumers. Many housing finance companies have already reduced rates by 50-75 basis points. I expect them to cut rates further,” said S Sridhar, chairman and managing director, NHB.
NHB extends refinance for rural housing projects at 8 per cent, while for other sections, the rate varies between 9 per cent and 9.5 per cent. It has also reduced its prime lending rate (PLR) by 50 basis points to 10.75 per cent.
Following the series of measures, the two largest housing finance companies -- HDFC and LIC Housing Finance -- have lowered interest rates. Earlier this month, HDFC lowered its retail PLR by 50 basis points to 14.50 per cent, while LIC Housing Finance said it would cut its offer rate by 175 basis points to 9.75 per cent for loans up to Rs 20 lakh with a tenure of more than five years.
Sridhar also said that NHB is planning to raise Rs 3,000 crore, mostly through bonds, by June 2009. NHB had raised nearly Rs 7,800 crore in the first half of the year. In addition, the Reserve Bank of India (RBI) had granted it a refinance facility of Rs 4,000 crore.
“Our fund-raising plans will depend on demand. We are also getting Rs 4,000 crore refinance facility from RBI. We could be raising Rs 3,000 crore by June 2009. Our last borrowing was 10 days ago, which was a zero coupon bond, with effective interest rate of eight per cent,” Sridhar said.
NHB is also pushing reverse mortgage scheme and expects to finalise tie-up with insurance companies before the launch of a new annuity product for senior citizens.
“We are in talks with major insurance companies for the new product,” Sridhar said, while referring to the restructuring of reverse mortgage.
Sridhar said NHB was hopeful of extending the tenure of loan to senior citizens under reverse mortgage to their entire lifetime from 20 years at present.
New hospitality projects in north
Kanatal Resorts and Spa Private Ltd, which has recently set up a new property worth Rs 25 crore in Uttaranchal, is considering setting up a similar resort at an offbeat location.
Besides, the company will also come up with a five-star hotel near Dehradun. The construction for the same is likely to start from the mid 2009,which is expected to get functional by the end of 2011.
The Kanatal resort has witnessed occupancy around 52 per cent from June to November and has generated revenue of Rs 1.5 crore till now.
Deepak Mittal managing director, Kanatal Resort said, “Tourism industry now a days is not only about staying in a resort or a hotel. The concept has expanded and people are looking forward for change with additional services, better quality and value for their money. Our resort has catered to various upmarket elites and foreign nationals since its opening. To attract more number of guests all across India and foreign nations in the future, we will expand the concept of spa by introducing various spa packages for the guests travelling to Himalayas. Our luxury spa getaways will attract many visitors to the area and from abroad”.
“Ananda spa is no doubt a great success story in India. But Kanatal Resort and Spa is here to provide our Indian friends with same comfort and therapies, which are available internationally giving the best and the latest healing therapies,” Mittal added.
Besides, the company will also come up with a five-star hotel near Dehradun. The construction for the same is likely to start from the mid 2009,which is expected to get functional by the end of 2011.
The Kanatal resort has witnessed occupancy around 52 per cent from June to November and has generated revenue of Rs 1.5 crore till now.
Deepak Mittal managing director, Kanatal Resort said, “Tourism industry now a days is not only about staying in a resort or a hotel. The concept has expanded and people are looking forward for change with additional services, better quality and value for their money. Our resort has catered to various upmarket elites and foreign nationals since its opening. To attract more number of guests all across India and foreign nations in the future, we will expand the concept of spa by introducing various spa packages for the guests travelling to Himalayas. Our luxury spa getaways will attract many visitors to the area and from abroad”.
“Ananda spa is no doubt a great success story in India. But Kanatal Resort and Spa is here to provide our Indian friends with same comfort and therapies, which are available internationally giving the best and the latest healing therapies,” Mittal added.
Maytas selling assets, wants to raise $500 million
Maytas Properties, the Hyderabad-based real estate firm linked to Satyam Computer Services chairman S Ramalinga Raju’s family, has reportedly approached consulting firms and bankers to chart out a $500 million (about Rs 2,350-crore) fund-raising plan through divestments in key identified assets. Maytas’ fund-raising exercise would see the property firm bring in equity partners in some of its ambitious projects or sell some of its assets spread across most southern states, a business daily reported.
However, a Maytas spokesperson has declined and said: “We cannot comment on market speculation.”
Kotak Realty, a real estate fund promoted by Kotak Mahindra Group, is in talks with Maytas to pick up equity in Maytas’ warehousing project. Confirming the development, Kotak Realty Fund CEO S Srinivasan said: “We are in talks, (but) no deal has been signed so far.”
Some of the assets that could be used to unlock cash, include the group’s three SEZs, an ambitious warehousing project, property developments in various cities and outright sale of land parcels in and around Hyderabad, the report added.
Meanwhile, the firm has already put on block over 60 acres of land situated opposite to the Satyam Technology Centre in the northern outskirts of Hyderabad. With prevailing land valuations in the region at around Rs 4 crore per acre, the total value of this deal could reach Rs 250 crore. Maytas has about 350 acres of land in Nagpur, Maharashtra, as part of its land bank and for 25 upcoming projects in Andhra Pradesh and Tamil Nadu.
The funds from some of these equity dilutions are expected to meet the promoters’ equity contribution in the Rs 12,000 crore Hyderabad Metro Rail project that has been undertaken by the group company Maytas Infra, quoted sources close to the development in the report.
Earlier, Satyam has called off the purchase of Maytas Properties, for $1.3 billion and a 51 per cent stake in Maytas Infra, citing "the market reaction to the decision.
However, a Maytas spokesperson has declined and said: “We cannot comment on market speculation.”
Kotak Realty, a real estate fund promoted by Kotak Mahindra Group, is in talks with Maytas to pick up equity in Maytas’ warehousing project. Confirming the development, Kotak Realty Fund CEO S Srinivasan said: “We are in talks, (but) no deal has been signed so far.”
Some of the assets that could be used to unlock cash, include the group’s three SEZs, an ambitious warehousing project, property developments in various cities and outright sale of land parcels in and around Hyderabad, the report added.
Meanwhile, the firm has already put on block over 60 acres of land situated opposite to the Satyam Technology Centre in the northern outskirts of Hyderabad. With prevailing land valuations in the region at around Rs 4 crore per acre, the total value of this deal could reach Rs 250 crore. Maytas has about 350 acres of land in Nagpur, Maharashtra, as part of its land bank and for 25 upcoming projects in Andhra Pradesh and Tamil Nadu.
The funds from some of these equity dilutions are expected to meet the promoters’ equity contribution in the Rs 12,000 crore Hyderabad Metro Rail project that has been undertaken by the group company Maytas Infra, quoted sources close to the development in the report.
Earlier, Satyam has called off the purchase of Maytas Properties, for $1.3 billion and a 51 per cent stake in Maytas Infra, citing "the market reaction to the decision.
Tuesday, December 30, 2008
Concept paper for the proposed Chennai-Bangalore-Mumbai industrial corridor
The Centre has asked IDFC Projects Ltd, a part of IDFC Ltd, to prepare the concept paper for the proposed Chennai-Bangalore-Mumbai industrial corridor. This follows requests from the southern States for the industrial corridor, on the lines of the Delhi-Mumbai Industrial Corridor Project.
The Delhi-Mumbai Industrial Corridor, which is being developed with Japanese technological and financial cooperation, aims at doubling employment potential, tripling industrial output and quadrupling exports from the region in the first five years.
The Centre has incorporated the Delhi Mumbai Industrial Corridor Development Corporation as the nodal agency for building the 1,483-km-long industrial corridor.
The Centre will hold a 49 per cent stake, with the balance being held by financial institutions — IL&FS, IDFC, IIFC — and the six State governments through which the proposed corridor will pass through.
Work on the corridor will be done in two phases, with the first phase likely to be completed during 2008-12 and the second phase from 2012 to 2016.
The project envisages setting up in the first phase, one investment region spread over 200 sq km and an industrial area of a smaller size in each State, barring Delhi.
The Delhi-Mumbai Industrial Corridor, which is being developed with Japanese technological and financial cooperation, aims at doubling employment potential, tripling industrial output and quadrupling exports from the region in the first five years.
The Centre has incorporated the Delhi Mumbai Industrial Corridor Development Corporation as the nodal agency for building the 1,483-km-long industrial corridor.
The Centre will hold a 49 per cent stake, with the balance being held by financial institutions — IL&FS, IDFC, IIFC — and the six State governments through which the proposed corridor will pass through.
Work on the corridor will be done in two phases, with the first phase likely to be completed during 2008-12 and the second phase from 2012 to 2016.
The project envisages setting up in the first phase, one investment region spread over 200 sq km and an industrial area of a smaller size in each State, barring Delhi.
Only 36 new malls out of 75 got operational in 2008
According to real estate consultant firm Cushman & Wakefield, in the top eight cities, about 20 million sq ft mall area was to developed in 2008. But these cities -- Mumbai, Delhi, Kolkata, Chennai, Ahmedabad, Bangalore, Hyderabad and Pune -- saw only about 9.5 million sq ft become operational. Basically, out of the proposed 75 mall projects that were to come up in these cities, only 36 saw the light of the day.
Further, the National Captial Region and Mumbai were the top two cities that witnessed the highest decline in retail absorption. For instance, NCR was to see development of about seven million sq ft space but only four million sq ft came up.
Industry analysts say that in Mumbai some malls were being converted into offices. Hyderabad, Kolkata, Chennai and Pune also witnessed significant decline in the retail absorption in the malls.
Rajneesh Mahajan, director of retail services, India at Cushman & Wakefield said, “Many malls that were to open in 2009 may not come up at all. From the projected supply of 20 million sq ft space in 2008, we might see a spill over of about one million sq ft development in 2009. Lack of funds leading to construction delays and rack rate lease rentals, wherein whoever pays more gets the space has resulted in slow absorption of retail space in malls.”
Mahajan added that some retailers over projected their revenues from their outlets in the malls, therefore, adopting a cautious approach to expansion in malls.
Further, the National Captial Region and Mumbai were the top two cities that witnessed the highest decline in retail absorption. For instance, NCR was to see development of about seven million sq ft space but only four million sq ft came up.
Industry analysts say that in Mumbai some malls were being converted into offices. Hyderabad, Kolkata, Chennai and Pune also witnessed significant decline in the retail absorption in the malls.
Rajneesh Mahajan, director of retail services, India at Cushman & Wakefield said, “Many malls that were to open in 2009 may not come up at all. From the projected supply of 20 million sq ft space in 2008, we might see a spill over of about one million sq ft development in 2009. Lack of funds leading to construction delays and rack rate lease rentals, wherein whoever pays more gets the space has resulted in slow absorption of retail space in malls.”
Mahajan added that some retailers over projected their revenues from their outlets in the malls, therefore, adopting a cautious approach to expansion in malls.
Investment Square presents buyback offer on property purchase
Investment Square, the real estate expert advisory wing of Disha Direct Marketing Services, has unveiled a first-of-its-kind real estate investment opportunity in the form of two extremely high-potential projects: Windmill Heights at New Mahabhaleshwar and ColorScape at Kasgaon. The projects, located at two relatively-unexplored yet highly promising destinations New Mahabaleshwar near Satara and Kasgaon near Shahapur (77km from Mumbai) in Maharashtra, offer property buyers an assured 50 per cent appreciation in value in 24 months.
A Shyamsunder, CEO, Investment Square said, "This scheme will enable investors to reap high returns in future if they opt to retain the plot and at the same time guarantees a minimum return to those who opt for a buyback of the plot."
A minimum investment of Rs 3 lakh is required to book this attractive investment. All investments will be secured by a Memorandum of Understanding (MoU) on a stamp paper acknowledging the investment and duly allotting the area of land against the amount paid by the buyer. The investor would be offered a guarantee of appreciation on the stamp paper on the expiry of the duration of 24-months scheme. The company is also offering the investor post dated cheques of the amount payable on maturity.
The New Mahabaleshwar project offers plots of around 10,000 sq ft at Rs 30 per sq ft., while the plots at Shahapur measuring 3,000 sq ft each are being offered at a price of Rs 100 per sq ft.
A Shyamsunder, CEO, Investment Square said, "This scheme will enable investors to reap high returns in future if they opt to retain the plot and at the same time guarantees a minimum return to those who opt for a buyback of the plot."
A minimum investment of Rs 3 lakh is required to book this attractive investment. All investments will be secured by a Memorandum of Understanding (MoU) on a stamp paper acknowledging the investment and duly allotting the area of land against the amount paid by the buyer. The investor would be offered a guarantee of appreciation on the stamp paper on the expiry of the duration of 24-months scheme. The company is also offering the investor post dated cheques of the amount payable on maturity.
The New Mahabaleshwar project offers plots of around 10,000 sq ft at Rs 30 per sq ft., while the plots at Shahapur measuring 3,000 sq ft each are being offered at a price of Rs 100 per sq ft.
Structural stability audit for Mumbai's 40,000 buildings
The structural audit of buildings more than 30 years old will soon be a must in Maharashtra. The state legislature has passed a Bill to amend the municipal laws, making it obligatory for every owner or occupier of a building more than 30 years old to submit a structural stability certificate to guarantee that such structures are fit for human habitation.
There are around 2.5 lakh buildings in Mumbai, of which 40,000 are mostly in the island city, which are more than 30 years old. The Bill seeks amendment to the Mumbai Municipal Corporation Act, the Bombay Provincial Municipal Corporation Act, 1949, the City of Nagpur Municipal Corporation Act, 1948, and the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Township Act, 1965.
The Bill, which has been passed by both the houses of the legislature, follows the state government’s assurance to avoid recurrence of incidents like the Laxmi Chhaya building collapse in July last year in Borivli that left 20 people dead. One wing of the building had collapsed after one of the columns was tampered with during the renovation of a jewellery shop on the ground floor.
The Bill, which will now be sent to the governor for clearance, makes it expedient on the owners or occupiers of buildings over 30 years old to have the structures examined by a structural engineer registered with the municipal corporation or council. The structural engineer will certify if the building is fit for human habitation.
The owners will have to submit the structural stability certificate to the respective civic body -- corporation or council -- within a year when a building turns 30 years old and after every 10 years thereafter.
The civic chief may determine the condition of the building and recommend, on the basis of the structural engineer’s observations, corrective repairs. The owners would be liable for a fine if they fail to act on the recommendations of the structural engineer within six months of his report.
There are around 2.5 lakh buildings in Mumbai, of which 40,000 are mostly in the island city, which are more than 30 years old. The Bill seeks amendment to the Mumbai Municipal Corporation Act, the Bombay Provincial Municipal Corporation Act, 1949, the City of Nagpur Municipal Corporation Act, 1948, and the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Township Act, 1965.
The Bill, which has been passed by both the houses of the legislature, follows the state government’s assurance to avoid recurrence of incidents like the Laxmi Chhaya building collapse in July last year in Borivli that left 20 people dead. One wing of the building had collapsed after one of the columns was tampered with during the renovation of a jewellery shop on the ground floor.
The Bill, which will now be sent to the governor for clearance, makes it expedient on the owners or occupiers of buildings over 30 years old to have the structures examined by a structural engineer registered with the municipal corporation or council. The structural engineer will certify if the building is fit for human habitation.
The owners will have to submit the structural stability certificate to the respective civic body -- corporation or council -- within a year when a building turns 30 years old and after every 10 years thereafter.
The civic chief may determine the condition of the building and recommend, on the basis of the structural engineer’s observations, corrective repairs. The owners would be liable for a fine if they fail to act on the recommendations of the structural engineer within six months of his report.
Titling Law to prevent fraud in real estate sector
The system of registration of properties will be replaced by a titling system to reduce frauds. Earlier this year, the Delhi Government had hired a legal firm to draft the Bill. Consultation on it will soon be taken up along with various stakeholders like the real estate companies.
The move, officials feel, is the need of the hour to prevent rampant fraud in the real estate sector. '' In the city one property sometimes gets registered under different names even 17-18 times. The Titling Law will put an end to that,'' said an official.
As of now there is no central system of maintaining records of property ownership because of multiplicity of authorities. The proposed Central Authority under the draft Bill will maintain complete records of all properties and scrutinise the details provided to identify the real owner. These will also be digitised. This will prevent fraudulent claims on ownership of a property as the records will be available for courts to take decisions. Registration of agricultural land, however, will be out of its purview.
The Authority will also function as a Tribunal to look at disputes and an appellate Tribunal too. All data collected by the Titling Auhtority staff will be digitised and Title status of properties registered with it will be put up on a central website for all to see.
''The draft is ready. It will be send to the minister for approval and taken up for discussion with stakeholders like real estate firms. It will then go to the cabinet - which may take about six months' time - and then to the Centre for clearance. Only after all this will the Bill come back to the state and move towards being cleared in the Delhi Assembly to be enacted as the law,” according to the official.
“The USA, UK, European nations, Hong Kong, Singapore and many other countries have Titling laws, so why not us?,” the official asserted.
The move, officials feel, is the need of the hour to prevent rampant fraud in the real estate sector. '' In the city one property sometimes gets registered under different names even 17-18 times. The Titling Law will put an end to that,'' said an official.
As of now there is no central system of maintaining records of property ownership because of multiplicity of authorities. The proposed Central Authority under the draft Bill will maintain complete records of all properties and scrutinise the details provided to identify the real owner. These will also be digitised. This will prevent fraudulent claims on ownership of a property as the records will be available for courts to take decisions. Registration of agricultural land, however, will be out of its purview.
The Authority will also function as a Tribunal to look at disputes and an appellate Tribunal too. All data collected by the Titling Auhtority staff will be digitised and Title status of properties registered with it will be put up on a central website for all to see.
''The draft is ready. It will be send to the minister for approval and taken up for discussion with stakeholders like real estate firms. It will then go to the cabinet - which may take about six months' time - and then to the Centre for clearance. Only after all this will the Bill come back to the state and move towards being cleared in the Delhi Assembly to be enacted as the law,” according to the official.
“The USA, UK, European nations, Hong Kong, Singapore and many other countries have Titling laws, so why not us?,” the official asserted.
Unitech's share rises
Shares of Unitech rose by 5.12 per cent to close at Rs 37.95, after the company announced that its telecom subsidiaries have received 4.4 MHz of spectrum in the 1,800 MHz GSM bandwidth in four service areas: Assam, Rajasthan, North East and Jammu & Kashmir.
With this, the company has been allotted spectrum in 20 of the total 22 service areas in the country. The stock made an intraday high of 38.55 and a low of Rs 33.9 with trading volumes of around 2.73 crore shares. The stock gained around 65 per cent in the past one month.
With this, the company has been allotted spectrum in 20 of the total 22 service areas in the country. The stock made an intraday high of 38.55 and a low of Rs 33.9 with trading volumes of around 2.73 crore shares. The stock gained around 65 per cent in the past one month.
Real estate companies increased borrowings through issuances of commercial papers
Indian real estate companies have stepped up borrowings through issuances of commercial papers (CPs) after the country’s central bank injected liquidity by cutting cash reserve ratio and as banks continue to shy away from extending loans.
Cash-strapped real estate firms are resorting to short-term borrowings of funds to complete ongoing projects as the economic slowdown has virtually halted demand for properties, freezing cash flows.
Issuances of CPs by companies including real estate developers have jumped 66 per cent in the fortnight ended November 30 compared to the previous fortnight, data released by the Reserve Bank of India (RBI) showed. Borrowings through the short-term instrument jumped to Rs 3,430 crore from Rs 2,065 crore in the period.
“Real estate companies have stepped up issuances of CPs even as banks are reluctant to extend loans. Few manufacturing companies have tapped the CP market,” a State Bank of India official said.
Real estate companies are borrowing through CPs as they are able to raise funds at cheaper rates compared to bank loans. The public sector banks are lending to their best customers at an average rate of 12.5-13.5 per cent, while non state-run banks lend at rates as high as 17.25 per cent.
Comparatively, real estate companies can raise funds through issuances of CPs at as low a rate as 9 per cent.
The revival of the issuances of CPs comes nearly two months after overnight rate spiralled as high as 22 per cent owing to the acute liquidity crunch. Mutual funds, among the biggest investors in the money market, or short-term instruments, were flooded with redemptions making it difficult for companies to raise funds through issuances of CPs.
Indian companies raised as much as Rs 6,283 crore in the fortnight ended April 15, 2008 through issuances of CPs at a time where interest rates ranged between 7.74 and 10.25 per cent, RBI data showed.
In the last month, mutual funds, after having regained investors’ confidence, stepped up their investments in CPs and other money-market instruments, a treasury official with small private bank said.
Reflecting the sentiments and return of liquidity, banks have also stepped up their investments in CPs and other money-market instruments. Bank investments in CPs have risen 84 per cent in the fortnight ended December 5, 2008 to November Rs 16,275 compared with Rs 15,680 on November 21, the central bank showed.
Banks park their surplus funds with the central bank at a rate of 5.5 per cent while investments in CPs offer them a return of more than 9 per cent, RBI data showed.
Cash-strapped real estate firms are resorting to short-term borrowings of funds to complete ongoing projects as the economic slowdown has virtually halted demand for properties, freezing cash flows.
Issuances of CPs by companies including real estate developers have jumped 66 per cent in the fortnight ended November 30 compared to the previous fortnight, data released by the Reserve Bank of India (RBI) showed. Borrowings through the short-term instrument jumped to Rs 3,430 crore from Rs 2,065 crore in the period.
“Real estate companies have stepped up issuances of CPs even as banks are reluctant to extend loans. Few manufacturing companies have tapped the CP market,” a State Bank of India official said.
Real estate companies are borrowing through CPs as they are able to raise funds at cheaper rates compared to bank loans. The public sector banks are lending to their best customers at an average rate of 12.5-13.5 per cent, while non state-run banks lend at rates as high as 17.25 per cent.
Comparatively, real estate companies can raise funds through issuances of CPs at as low a rate as 9 per cent.
The revival of the issuances of CPs comes nearly two months after overnight rate spiralled as high as 22 per cent owing to the acute liquidity crunch. Mutual funds, among the biggest investors in the money market, or short-term instruments, were flooded with redemptions making it difficult for companies to raise funds through issuances of CPs.
Indian companies raised as much as Rs 6,283 crore in the fortnight ended April 15, 2008 through issuances of CPs at a time where interest rates ranged between 7.74 and 10.25 per cent, RBI data showed.
In the last month, mutual funds, after having regained investors’ confidence, stepped up their investments in CPs and other money-market instruments, a treasury official with small private bank said.
Reflecting the sentiments and return of liquidity, banks have also stepped up their investments in CPs and other money-market instruments. Bank investments in CPs have risen 84 per cent in the fortnight ended December 5, 2008 to November Rs 16,275 compared with Rs 15,680 on November 21, the central bank showed.
Banks park their surplus funds with the central bank at a rate of 5.5 per cent while investments in CPs offer them a return of more than 9 per cent, RBI data showed.
Stimulus package soon
Prime minister Manmohan Singh today held consultations with Reserve Bank of India governor D Subbarao amid expectations that the government would shortly announce its second stimulus package to prop up the economy hit by the global slowdown.
The central bank is likely to complement the fiscal package by announcing further cuts in its key interest rates like repo (the rate at which it lends to banks) and reverse repo (the rate at which it borrows) by up to one percentage point to further bring down interest rates. Other monetary measures could include refinance support to banks to lend to infrastructure projects held up due to non-availability of long-term finance.
Singh, who also holds the charge of the finance ministry, is understood to have discussed specific proposals in the package that are expected to be announced in a few days, sources said.
Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia told reporters that stimulus package would be announced within a few days, adding the strategy was to prepare a plan that could be implemented even during the next fiscal.
The government is likely to announce further fiscal incentives for labour-intensive sectors like textiles. A proposal to give a higher tax exemption on home loans is also being considered. Currently, up to Rs 1.5 lakh rebate is annually given for interest and principal payment towards home loans availed by taxpayers.
The government has already announced a 4 per cent cut in excise duty across-the-board and raised the public expenditure by Rs 20,000 crore in the first stimulus package announced early this month to counter the impact of the global meltdown.
The Reserve Bank on its part had injected around Rs 3 lakh crore liquidity into the system through a series of cuts in key policy rates and other measures in the last two months. Taking cues from the RBI, several banks have lowered their lending rates.
Reeling under the global slowdown, India’s industrial growth declined 0.4 per cent in October for the first time in 15 years.
The central bank is likely to complement the fiscal package by announcing further cuts in its key interest rates like repo (the rate at which it lends to banks) and reverse repo (the rate at which it borrows) by up to one percentage point to further bring down interest rates. Other monetary measures could include refinance support to banks to lend to infrastructure projects held up due to non-availability of long-term finance.
Singh, who also holds the charge of the finance ministry, is understood to have discussed specific proposals in the package that are expected to be announced in a few days, sources said.
Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia told reporters that stimulus package would be announced within a few days, adding the strategy was to prepare a plan that could be implemented even during the next fiscal.
The government is likely to announce further fiscal incentives for labour-intensive sectors like textiles. A proposal to give a higher tax exemption on home loans is also being considered. Currently, up to Rs 1.5 lakh rebate is annually given for interest and principal payment towards home loans availed by taxpayers.
The government has already announced a 4 per cent cut in excise duty across-the-board and raised the public expenditure by Rs 20,000 crore in the first stimulus package announced early this month to counter the impact of the global meltdown.
The Reserve Bank on its part had injected around Rs 3 lakh crore liquidity into the system through a series of cuts in key policy rates and other measures in the last two months. Taking cues from the RBI, several banks have lowered their lending rates.
Reeling under the global slowdown, India’s industrial growth declined 0.4 per cent in October for the first time in 15 years.
IDBI Home Finance for sale
IDBI Bank has put its wholly-owned housing finance subsidiary IDBI Home Finance for sale five years after it purchased it from the Tatas, a leading financial daily reported.
While discussions with potential buyers have not reached a final stage, an unnamed person familiar with the development was quoted in the report as saying, financial services companies such as Tata Capital, Edelweiss, Religare Enterprises along with two private equity investors have evinced an interest in the housing finance company.
IDBI is looking to sell its subsidiary as the parent company itself is involved in the mortgage lending business and it feels that the present situation of two companies doing the same business was leading to unnecessary duplication, the report said.
According to the source quoted in the report, IDBI Bank is looking for a selling price of around Rs 170-200 crore, IDBI Homefinance’s home loan portfolio as on March 31 2008 was Rs 2,710 crore, up Rs 563 crore from a year earlier.
The company, which has 18 branches across major cities, had reported a net profit of Rs 30 crore for 2007-08.
While discussions with potential buyers have not reached a final stage, an unnamed person familiar with the development was quoted in the report as saying, financial services companies such as Tata Capital, Edelweiss, Religare Enterprises along with two private equity investors have evinced an interest in the housing finance company.
IDBI is looking to sell its subsidiary as the parent company itself is involved in the mortgage lending business and it feels that the present situation of two companies doing the same business was leading to unnecessary duplication, the report said.
According to the source quoted in the report, IDBI Bank is looking for a selling price of around Rs 170-200 crore, IDBI Homefinance’s home loan portfolio as on March 31 2008 was Rs 2,710 crore, up Rs 563 crore from a year earlier.
The company, which has 18 branches across major cities, had reported a net profit of Rs 30 crore for 2007-08.
Unitech intned to meet on January 19
Real estate major Unitech said its shareholders will meet on January 19 to consider raising of Rs 5,000 crore through issue of securities in both domestic and international markets.
The shareholders would also consider increasing the authorised share capital of the company to Rs 1,000 crore from the current Rs 500 crore, the company said in a filing to the Bombay Stock Exchange.
Last week, the Unitech board had approved the raising of Rs 5,000 crore or equivalent amounts in other currencies, through issuance of further securities.
Meanwhile, the company said it has received start-up spectrum in four more service areas, taking the total to 20. The allotment has been made for Assam, Rajasthan, North East and Jammu & Kashmir service areas, Unitech said in a filing to the Bombay Stock Exchange.
Now, of the total 22 services areas in the country, the realty major has received spectrum in 20 circles to start its services.
The company had earlier announced its plans to sell a 60 per cent stake in the telecom business to Norway’s telecom major Telenor for Rs 6,120 crore.
The shareholders would also consider increasing the authorised share capital of the company to Rs 1,000 crore from the current Rs 500 crore, the company said in a filing to the Bombay Stock Exchange.
Last week, the Unitech board had approved the raising of Rs 5,000 crore or equivalent amounts in other currencies, through issuance of further securities.
Meanwhile, the company said it has received start-up spectrum in four more service areas, taking the total to 20. The allotment has been made for Assam, Rajasthan, North East and Jammu & Kashmir service areas, Unitech said in a filing to the Bombay Stock Exchange.
Now, of the total 22 services areas in the country, the realty major has received spectrum in 20 circles to start its services.
The company had earlier announced its plans to sell a 60 per cent stake in the telecom business to Norway’s telecom major Telenor for Rs 6,120 crore.
Puravankara going to launch first affordable housing project in Bangalore
Provident Housing and Infrastructure Ltd, a wholly owned subsidiary of the Bangalore-based Puravankara Group, is set to unveil its first affordable housing project in Bangalore.
“We are set to launch our first affordable housing project in Bangalore in January 2009. Initially, we are targeting Bangalore where we will be launching three new projects. Then we are looking at Chennai, Coimbatore and Cochin,” said Ashish Puravankara, director, Puravankara Group. Puravankara already has 105 acres in Bangalore which it would use for the project.
Earlier, in August 2008, the company has earmarked an investment of Rs 8,000 crore to set up affordable homes through its wholly owned subsidiary Provident Housing and Infrastructure Ltd. The funds for these projects will mainly be generated through private equity, the company had said. Meanwhile, it is also looking at internal accruals and customer advances.
The prices of Provident Homes, which are to be developed in a phased manner, are presently priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh comprising one, two and three bedroom homes respectively.
Under phase I, Puravankara will cover Bangalore, Chennai, Hyderabad, Coimbatore and Mysore, while in phase II, it will go to cities such as Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.
“Major expansion will be seen in our Provident Housing where we will really give a big push in the next couple of years,” Puravankara added.
“We are set to launch our first affordable housing project in Bangalore in January 2009. Initially, we are targeting Bangalore where we will be launching three new projects. Then we are looking at Chennai, Coimbatore and Cochin,” said Ashish Puravankara, director, Puravankara Group. Puravankara already has 105 acres in Bangalore which it would use for the project.
Earlier, in August 2008, the company has earmarked an investment of Rs 8,000 crore to set up affordable homes through its wholly owned subsidiary Provident Housing and Infrastructure Ltd. The funds for these projects will mainly be generated through private equity, the company had said. Meanwhile, it is also looking at internal accruals and customer advances.
The prices of Provident Homes, which are to be developed in a phased manner, are presently priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh comprising one, two and three bedroom homes respectively.
Under phase I, Puravankara will cover Bangalore, Chennai, Hyderabad, Coimbatore and Mysore, while in phase II, it will go to cities such as Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.
“Major expansion will be seen in our Provident Housing where we will really give a big push in the next couple of years,” Puravankara added.
Monday, December 29, 2008
Push for affordable housing
Describing the government's decision to provide five per cent interest subsidy on housing loans taken by the economically weaker sections (EWS) as "a move in the right direction", an industry lobby on Sunday said it would boost demand of affordable housing.
“The prevailing high interest rate has dampened the overall demand and has severely affected the affordability, thus making housing a distant dream of a common man,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
“The five per cent subsidy approved by the cabinet on Friday for the EWS and LIG (low income groups) is thus a move in the right direction, which will serve the twin objective of providing much needed relief to the general public and at the same time boosting demand in the economy,” Banerjee said.
According to Banerjee, the cost and availability of the land is a major bottleneck in making housing affordable. "There is, therefore, an urgent need to increase the supply of land at affordable prices,” Banerjee said.
“The supply of well-developed and commercially viable land would bring down the prices in the current markets,” Banerjee added.
To achieve this, the CII urged the government to provide infrastructure status to integrated township development, increase the municipal limits of the existing cities, relax floor space index and allocate specific land in any construction plan for the weaker sections.
The CII has also suggested that government should consider either waiving off or substantially reducing the stamp duty for the EWS and also promotion of appropriate low-cost housing technologies.
“With the phenomenal increase in population and urbanisation, the shortage of housing is expected to increase from 24.7 million dwelling units in 2007 to 26.5 million dwelling units by 2011,” it said.
“The prevailing high interest rate has dampened the overall demand and has severely affected the affordability, thus making housing a distant dream of a common man,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).
“The five per cent subsidy approved by the cabinet on Friday for the EWS and LIG (low income groups) is thus a move in the right direction, which will serve the twin objective of providing much needed relief to the general public and at the same time boosting demand in the economy,” Banerjee said.
According to Banerjee, the cost and availability of the land is a major bottleneck in making housing affordable. "There is, therefore, an urgent need to increase the supply of land at affordable prices,” Banerjee said.
“The supply of well-developed and commercially viable land would bring down the prices in the current markets,” Banerjee added.
To achieve this, the CII urged the government to provide infrastructure status to integrated township development, increase the municipal limits of the existing cities, relax floor space index and allocate specific land in any construction plan for the weaker sections.
The CII has also suggested that government should consider either waiving off or substantially reducing the stamp duty for the EWS and also promotion of appropriate low-cost housing technologies.
“With the phenomenal increase in population and urbanisation, the shortage of housing is expected to increase from 24.7 million dwelling units in 2007 to 26.5 million dwelling units by 2011,” it said.
HUDA wins over private realtors in Panipat
The areas developed by the Haryana Urban Development Authority (HUDA) in Panipat continue to enjoy confidence of the masses, even as slowdown in the area’s real estate sector is taking its toll on the projects being developed by private players.
According to experts, the HUDA areas are still catching the fancy of buyers whereas the private developers are looking for prospective buyers.
Local property dealers of Panipat have informed that transactions for areas developed by private builders have virtually come to a standstill and it is only the HUDA areas that are still doing businesses.
According to Mahinder Arora of A to Z Properties in Panipat, HUDA plots are still enjoying better premium than the ones being developed by private realtors, who are caught in an awkward situation.
While the prices of plots developed by private players vary from Rs 5,000-9,000 per sq yard, plots in the HUDA area are still commanding prices upwards of Rs 10,000 per sq yard.
The main reason behind HUDA areas faring well vis-Ã -vis private projects is because of the advantage they possess in terms of location. Majority of the areas developed by HUDA are centrally located and well equipped with infrastructure; whereas the colonies developed by private builders mostly lie on the outskirts and score much less on infrastructure facilities.
Panipat witnessed a spurt in real estate activities since 2005 when a slew of residential projects for the city were announced with a majority of them along the GT road. Ansal, TDI, Eldeco and Parsvnath were among the key developers that announced projects for Panipat.
According to dealers, the private builders mainly banked on the investors to help their sales but now with the investors disappearing from the market and the end users apprehensive about private projects, sales of private projects have taken a hit.
As a result, most of the private builders have either stalled their construction or have attuned pace of their construction.
The local property dealers maintain that to lend spurt to their sales, unofficially the private developers have started making correction in the prices as they are prepared to offer discounts in the range of 20-30 per cent to the end users.
According to experts, the HUDA areas are still catching the fancy of buyers whereas the private developers are looking for prospective buyers.
Local property dealers of Panipat have informed that transactions for areas developed by private builders have virtually come to a standstill and it is only the HUDA areas that are still doing businesses.
According to Mahinder Arora of A to Z Properties in Panipat, HUDA plots are still enjoying better premium than the ones being developed by private realtors, who are caught in an awkward situation.
While the prices of plots developed by private players vary from Rs 5,000-9,000 per sq yard, plots in the HUDA area are still commanding prices upwards of Rs 10,000 per sq yard.
The main reason behind HUDA areas faring well vis-Ã -vis private projects is because of the advantage they possess in terms of location. Majority of the areas developed by HUDA are centrally located and well equipped with infrastructure; whereas the colonies developed by private builders mostly lie on the outskirts and score much less on infrastructure facilities.
Panipat witnessed a spurt in real estate activities since 2005 when a slew of residential projects for the city were announced with a majority of them along the GT road. Ansal, TDI, Eldeco and Parsvnath were among the key developers that announced projects for Panipat.
According to dealers, the private builders mainly banked on the investors to help their sales but now with the investors disappearing from the market and the end users apprehensive about private projects, sales of private projects have taken a hit.
As a result, most of the private builders have either stalled their construction or have attuned pace of their construction.
The local property dealers maintain that to lend spurt to their sales, unofficially the private developers have started making correction in the prices as they are prepared to offer discounts in the range of 20-30 per cent to the end users.
State-run Repco Home Finance (RHFL) to cut lending rates
State-run Repco Home Finance (RHFL), majority owned by Repco Bank, would be cutting its prime lending rate by 25 to 50 basis points in January.
"With the benchmark interest rates set to go down further, we would be cutting our prime lending rate by 0.25 per cent to 0.50 per cent from the present 12 per cent by end of January," said S V Balasubramanian, executive director of Repco Home Finance.
RHFL, which started in 2002, is focused on lending for affordable housing in tier II and III cities. The lender at present has a network of 28 branches across Tamil Nadu, Andhra Pradesh, Karnataka and Pondicherry. The loan size range from Rs 500,000 to Rs 20,00,000 and nearly 95 per cent are under the floating category.
The company plans to disburse Rs 500 crore and increase its loan book to Rs 1,000 crore by March 2009. RHFL had loans outstanding of Rs 655.08 crore and disbursed Rs 275.58 crore in fiscal year 2008.
Balasubramanian said the company is on track to achieve its targets, helped by its direct-selling model, which has helped to cut operating costs and improve efficiency.
In December 2007, US private equity firm Carlyle Group picked up 49 per cent stake in the company for $27.7 million. RHFL now has a capital adequacy of 26 per cent, return on capital employed of 27 per cent and return of assets of 2.85 per cent.
Balasubramanian added that with the private funding, the company is adequately capitalised till 2010 to fund expansion into other states such as Maharashtra and Haryana.
"Though Carlyle is ready to bring in more funds if needed, we would be looking at fresh capital once we reach business of Rs 2,500 crore and look at initial public offering in 2011," Balasubramanian said.
"With the benchmark interest rates set to go down further, we would be cutting our prime lending rate by 0.25 per cent to 0.50 per cent from the present 12 per cent by end of January," said S V Balasubramanian, executive director of Repco Home Finance.
RHFL, which started in 2002, is focused on lending for affordable housing in tier II and III cities. The lender at present has a network of 28 branches across Tamil Nadu, Andhra Pradesh, Karnataka and Pondicherry. The loan size range from Rs 500,000 to Rs 20,00,000 and nearly 95 per cent are under the floating category.
The company plans to disburse Rs 500 crore and increase its loan book to Rs 1,000 crore by March 2009. RHFL had loans outstanding of Rs 655.08 crore and disbursed Rs 275.58 crore in fiscal year 2008.
Balasubramanian said the company is on track to achieve its targets, helped by its direct-selling model, which has helped to cut operating costs and improve efficiency.
In December 2007, US private equity firm Carlyle Group picked up 49 per cent stake in the company for $27.7 million. RHFL now has a capital adequacy of 26 per cent, return on capital employed of 27 per cent and return of assets of 2.85 per cent.
Balasubramanian added that with the private funding, the company is adequately capitalised till 2010 to fund expansion into other states such as Maharashtra and Haryana.
"Though Carlyle is ready to bring in more funds if needed, we would be looking at fresh capital once we reach business of Rs 2,500 crore and look at initial public offering in 2011," Balasubramanian said.
LIC Housing Finance to disburse loans worth Rs 10,000 crore
LIC Housing Finance (LICHF) is planning to disburse loans worth Rs 10,000 crore this fiscal, up from the Rs 7,100 crore last year.
“During the last financial year, we disbursed loans worth Rs 7,100 crore and our annual target for this year is Rs 10,000 crore," said R R Nair, director and chief executive, LIC Housing Finance.
LIC Housing Finance, a fully-owned subsidiary of the Life Insurance Corporation of India, has so far approved over Rs 5,500 crore and already disbursed around Rs 4,500 crore, Nair said.
The company also expects to bring down its Non-Performing Assets (NPA) by fiscal end, Nair said.
"We have been maintaining our NPA year after year. Last year, it was 1.7 (gross) and a net of 0.63. This year we expect it to come down to atleast 1.6," Nair said.
Referring to the slowdown in the real estate sector, he said the company was not facing any problem, adding, "there may be a slowdown for builders targeting investors or speculators. I don't think there is slowness for those who are focusing on genuine end-users," Nair said.
"We have been operating in the end-user segment and so have not experienced any slowdown," Nair said adding that the end-user segment had a vast potential due to a demand-supply gap of 27 million dwelling units in the country.
"We have a growth rate of 30 per cent plus compared to corresponding period last year. This growth rate is considered to be decent in the current scenario," Nair said.
“During the last financial year, we disbursed loans worth Rs 7,100 crore and our annual target for this year is Rs 10,000 crore," said R R Nair, director and chief executive, LIC Housing Finance.
LIC Housing Finance, a fully-owned subsidiary of the Life Insurance Corporation of India, has so far approved over Rs 5,500 crore and already disbursed around Rs 4,500 crore, Nair said.
The company also expects to bring down its Non-Performing Assets (NPA) by fiscal end, Nair said.
"We have been maintaining our NPA year after year. Last year, it was 1.7 (gross) and a net of 0.63. This year we expect it to come down to atleast 1.6," Nair said.
Referring to the slowdown in the real estate sector, he said the company was not facing any problem, adding, "there may be a slowdown for builders targeting investors or speculators. I don't think there is slowness for those who are focusing on genuine end-users," Nair said.
"We have been operating in the end-user segment and so have not experienced any slowdown," Nair said adding that the end-user segment had a vast potential due to a demand-supply gap of 27 million dwelling units in the country.
"We have a growth rate of 30 per cent plus compared to corresponding period last year. This growth rate is considered to be decent in the current scenario," Nair said.
Rs 1 trillion for infrastructure sector says Assocham
The Associated Chambers of Commerce and Industry (Assocham) has urged the government to set up a Rs1 trillion (Rs 1,00,000 crore) 'revolving fund' to assist infrastructure firms to weather the global meltdown.
"Assocham has mooted a proposal for constitution of Rs 1,00,000 crore revolving fund to assist infrastructure firms to hike their activities to beat current meltdown in economy...," said Assocham in its mid-year economic review. A revolving fund is a fund or account whose income remains available to finance its continuing operations without any fiscal year limitation.
"Several private sector projects in sectors such as automobile, transportation, fertiliser, refineries and oil and gas exploration, face capital shortage," Assocham said.
Fall in corporate profitability has affected flow of savings into the capital market which has seen withdrawal of $13 billion since January, 2008.
"Industry now looks forward to second tranche of measures by the government for stimulating the economy," the review added. Industrial output in October contracted by 0.4 per cent and exports plunged by 12.1 per cent.
On the services sector, which accounts for 55 per cent of the GDP, it said the segment should not be allowed to flounder in the wake of global downturn and loss of domestic output.
About worsening employment situation, the chamber said increasing investment in infrastructure and giving a boost to the labour intensive sectors like textile would help create jobs as answer to the crisis does not lie in blocking job reduction by corporates but helping them through demand creation.
"Assocham has mooted a proposal for constitution of Rs 1,00,000 crore revolving fund to assist infrastructure firms to hike their activities to beat current meltdown in economy...," said Assocham in its mid-year economic review. A revolving fund is a fund or account whose income remains available to finance its continuing operations without any fiscal year limitation.
"Several private sector projects in sectors such as automobile, transportation, fertiliser, refineries and oil and gas exploration, face capital shortage," Assocham said.
Fall in corporate profitability has affected flow of savings into the capital market which has seen withdrawal of $13 billion since January, 2008.
"Industry now looks forward to second tranche of measures by the government for stimulating the economy," the review added. Industrial output in October contracted by 0.4 per cent and exports plunged by 12.1 per cent.
On the services sector, which accounts for 55 per cent of the GDP, it said the segment should not be allowed to flounder in the wake of global downturn and loss of domestic output.
About worsening employment situation, the chamber said increasing investment in infrastructure and giving a boost to the labour intensive sectors like textile would help create jobs as answer to the crisis does not lie in blocking job reduction by corporates but helping them through demand creation.
Unitech plans SEZs in Haryana
Unitech, the country's second largest realty firm, has plans to set up two special economic zones (SEZs) in Haryana for automobiles and apparel sectors. The company, according to a senior official, had already identified 70 per cent of the land for these two planned SEZs.
"We are planning to apply for two product specific SEZs after a couple of months. One is for auto and another is for apparel. We would apply for the approval with the Commerce Ministry within the next six months,” said Ramesh Chandra, chairman, Unitech. Chandra, however, declined to comment on the sizes of the two SEZs.
At present, Unitech has seven notified SEZ projects in Kolkata, Gurgaon, Noida, Greater Noida, Tamil Nadu and Andhra Pradesh. Chandra, however, declined to comment on the sizes of the two SEZs.
"We have seven notified SEZs. Construction is going on in three SEZs and they are also partly occupied," Chandra said, adding that the construction activities in one more SEZ would start very shortly.
When asked how much the company plans to invest in its SEZ projects, Chandra declined to comment saying, "It is demand oriented. We construct to the extent we are able to let out."
Chandra, however, said some of the SEZ projects have private equity funding.
Besides SEZs, the company is also planning to focus on mid-income housing and expanding its hotel business.
Earlier this month, Unitech had announced to invest about Rs 2,500 crore to develop 35 hotels across the country over the next seven years, while similar amount would be pumped in to build 10,000 units in Rs 30-50 lakh category.
"We are planning to apply for two product specific SEZs after a couple of months. One is for auto and another is for apparel. We would apply for the approval with the Commerce Ministry within the next six months,” said Ramesh Chandra, chairman, Unitech. Chandra, however, declined to comment on the sizes of the two SEZs.
At present, Unitech has seven notified SEZ projects in Kolkata, Gurgaon, Noida, Greater Noida, Tamil Nadu and Andhra Pradesh. Chandra, however, declined to comment on the sizes of the two SEZs.
"We have seven notified SEZs. Construction is going on in three SEZs and they are also partly occupied," Chandra said, adding that the construction activities in one more SEZ would start very shortly.
When asked how much the company plans to invest in its SEZ projects, Chandra declined to comment saying, "It is demand oriented. We construct to the extent we are able to let out."
Chandra, however, said some of the SEZ projects have private equity funding.
Besides SEZs, the company is also planning to focus on mid-income housing and expanding its hotel business.
Earlier this month, Unitech had announced to invest about Rs 2,500 crore to develop 35 hotels across the country over the next seven years, while similar amount would be pumped in to build 10,000 units in Rs 30-50 lakh category.
Aparna Group dives into affordable housing
Hyderabad-based Aparna Constructions and Estates, which is in the process of raising 14 high rise towers through a special purpose vehicle (SPV) with Morgan Stanley, and another project with JP Morgan, is mulling over to launch affordable housing projects. Aparna Constructions, according to a senior official, is in the process of investing Rs 700 crore in a residential complex with 1,120 apartments, spread over a 17-acre site at the technology corridor near the Hitech City in Hyderabad.
DS Prasad, director, Aparna Constructions said the company is in the process of finalising plans for an affordable housing complex. It expects to take up two projects shortly aimed at addressing the needs of buyers with in the range of Rs 20-40 lakh an apartment.
The company has thus far executed two large commercial complexes and is developing 12 residential projects, Prasad said.
The upcoming Aparna Sarover project will host 14 towers of 20 floors each, by far the tallest residential towers in Hyderabad. The entire project will be completed by December 2009, according to Prasad.
When asked if the slowdown has impacted the sales for the company, Prasad said most of the apartments were sold during first half of 2008 and that too several of them on bulk bookings for IT companies. “Unlike other developers, our upfront payment is about 25 per cent of the project cost,” Prasad said.
Thus far the company has developed 2 million sq ft of office cum residential space and has about 50 lakh sq ft of development work in the pipeline.
Conducting through the towers and a model apartment, the company displayed high level of automation used in the project. Each apartment of 1,800 sq ft works out to about Rs 70 lakh.
DS Prasad, director, Aparna Constructions said the company is in the process of finalising plans for an affordable housing complex. It expects to take up two projects shortly aimed at addressing the needs of buyers with in the range of Rs 20-40 lakh an apartment.
The company has thus far executed two large commercial complexes and is developing 12 residential projects, Prasad said.
The upcoming Aparna Sarover project will host 14 towers of 20 floors each, by far the tallest residential towers in Hyderabad. The entire project will be completed by December 2009, according to Prasad.
When asked if the slowdown has impacted the sales for the company, Prasad said most of the apartments were sold during first half of 2008 and that too several of them on bulk bookings for IT companies. “Unlike other developers, our upfront payment is about 25 per cent of the project cost,” Prasad said.
Thus far the company has developed 2 million sq ft of office cum residential space and has about 50 lakh sq ft of development work in the pipeline.
Conducting through the towers and a model apartment, the company displayed high level of automation used in the project. Each apartment of 1,800 sq ft works out to about Rs 70 lakh.
Saturday, December 27, 2008
Era calls off merger
Era Group, the New Delhi-based infrastructure, real estate, power and construction equipment player, has cancelled plans to combine its realty arm with its entertainment and hospitality business due to the slowdown.
Last month, the group withdrew its application to the Bombay Stock Exchange to merge Era Landmarks with the listed Era E-Zone, said H S Bharana, the group’s chairman and managing director.
Era Group’s other firms are Era Infra Engineering, Era Power and Era Building Systems. Era Group, with projects worth Rs 5,000 crore, was reportedly planning to create three verticals -- construction and infrastructure (including power), real estate, and construction equipment. “We had planned to merge E-Zone with Era Landmarks but given the condition of the realty sector, we decided to go against it,” Bharana said.
Bharana added that Era Landmarks was doing well and it made more sense in the current scenario to keep the two firms separate. Era E-Zone has opened three multiplexes with 12 screens in Ajmer, Meerut and Jaipur in the last three months. Era Landmarks has 15 commercial and residential projects spread across tier-II and III towns, of which only the mall in Meerut is complete.
Bharana said, “Though we have invested only in prime locations in these towns, we are not focusing on real estate.” The group would lay stress on infrastructure in the coming months, Bharana added.
Moreover, no decision has been taken yet on the proposed merger of Era Power with Era Infra Engineering, the group’s flagship company, Bharana said.
The infrastructure firm is into roads and highways, railways and aviation, among others, and contributes two-third to the group’s topline.
Last month, the group withdrew its application to the Bombay Stock Exchange to merge Era Landmarks with the listed Era E-Zone, said H S Bharana, the group’s chairman and managing director.
Era Group’s other firms are Era Infra Engineering, Era Power and Era Building Systems. Era Group, with projects worth Rs 5,000 crore, was reportedly planning to create three verticals -- construction and infrastructure (including power), real estate, and construction equipment. “We had planned to merge E-Zone with Era Landmarks but given the condition of the realty sector, we decided to go against it,” Bharana said.
Bharana added that Era Landmarks was doing well and it made more sense in the current scenario to keep the two firms separate. Era E-Zone has opened three multiplexes with 12 screens in Ajmer, Meerut and Jaipur in the last three months. Era Landmarks has 15 commercial and residential projects spread across tier-II and III towns, of which only the mall in Meerut is complete.
Bharana said, “Though we have invested only in prime locations in these towns, we are not focusing on real estate.” The group would lay stress on infrastructure in the coming months, Bharana added.
Moreover, no decision has been taken yet on the proposed merger of Era Power with Era Infra Engineering, the group’s flagship company, Bharana said.
The infrastructure firm is into roads and highways, railways and aviation, among others, and contributes two-third to the group’s topline.
Apollo Asia Fund to invest in Indian residential projects
The Singapore-based Apollo Asia Opportunity Master Fund plans to invest $10 million (Rs 40 crore) in developing residential projects in south India. Havenstead Developers, floated by an NRI and an Indian entrepreneur, along with Apollo Asia will invest in joint ventures with project funding institutions to promote the residential development.
Amol Karnad, managing director, Havenstead Developers Pvt Ltd, with which the fund has signed an agreement, said these joint ventures would be special purpose vehicles that are subsidiaries of Havenstead, which has sought Foreign Investment Promotion Board (FIPB) approval for the investment.
“These would be large projects in line with the FDI regulations and focus primarily on the southern markets,” Karnad said, adding that FIPB application is to acquire the status of foreign-owned Indian operating-cum-holding company for making downstream investment in construction.
Karnad, who himself is a founder-promoter of Alacrity Housing, a company that in the 1990s was among the market leaders and a major brand, said he had been taken on board for his experience in developing projects in the South. Karnad would be supporting Apollo Asia set up its business in India.
Alacrity itself is going through a financial crunch, which it is addressing independently. Karnad clarified that there is “no direct connection to Alacrity” and Havenstead. Havenstead has committed to making the investments and is now in the process of identifying the projects, locations and studying the market.
But as of now the progress is slow because of the market conditions. While no transfer of funds have taken place, a firm commitment is made, Karnad said.
Amol Karnad, managing director, Havenstead Developers Pvt Ltd, with which the fund has signed an agreement, said these joint ventures would be special purpose vehicles that are subsidiaries of Havenstead, which has sought Foreign Investment Promotion Board (FIPB) approval for the investment.
“These would be large projects in line with the FDI regulations and focus primarily on the southern markets,” Karnad said, adding that FIPB application is to acquire the status of foreign-owned Indian operating-cum-holding company for making downstream investment in construction.
Karnad, who himself is a founder-promoter of Alacrity Housing, a company that in the 1990s was among the market leaders and a major brand, said he had been taken on board for his experience in developing projects in the South. Karnad would be supporting Apollo Asia set up its business in India.
Alacrity itself is going through a financial crunch, which it is addressing independently. Karnad clarified that there is “no direct connection to Alacrity” and Havenstead. Havenstead has committed to making the investments and is now in the process of identifying the projects, locations and studying the market.
But as of now the progress is slow because of the market conditions. While no transfer of funds have taken place, a firm commitment is made, Karnad said.
Friday, December 26, 2008
Suchirindia Developers moves into theme parks, budget hotels
Suchirindia Developers, the Hyderabad-based infrastructure major, will diversify its business into entertainment, hospitality and theme parks. With immediate plans to set up a casino in Colombo, the company is awaiting necessary clearances from the Sri Lankan Government. The company, according to a senior official, has embarked on a massive expansion-cum-diversification plan which entails overall spend of Rs 2,000 crore in the next three years.
Y Kiron, CEO, Suchirindia Developers said, “The company, which is into infrastructure and mining, is foraying into hospitality and theme parks, which would provide entertainment-cum-business conference features for corporates.”
“We will unveil two more projects shortly, including Darling Cave at Shamirpet, and negotiating for another one in Central Business District,” Kiron added.
“As a part of the hospitality business, we are in the process of finalising plans for establishing a chain of six budget hotels in the country,” Kiron said. These hotels, with an investment of Rs 30 crore each, are planned in Mysore, Bangalore, New Delhi, Chennai, Hyderabad and Kolkata. The company will be able to utilise the large land bank of over 3,500 acres it has created in several States.
Suchirindia has announced the Papyrus Port, an Egyptian resort-type theme park, about 15 km from the new international airport in Hyderabad, with an investment of Rs 20 crore. Meanwhile, it plans to invest Rs 40 crore for the second phase.
Y Kiron, CEO, Suchirindia Developers said, “The company, which is into infrastructure and mining, is foraying into hospitality and theme parks, which would provide entertainment-cum-business conference features for corporates.”
“We will unveil two more projects shortly, including Darling Cave at Shamirpet, and negotiating for another one in Central Business District,” Kiron added.
“As a part of the hospitality business, we are in the process of finalising plans for establishing a chain of six budget hotels in the country,” Kiron said. These hotels, with an investment of Rs 30 crore each, are planned in Mysore, Bangalore, New Delhi, Chennai, Hyderabad and Kolkata. The company will be able to utilise the large land bank of over 3,500 acres it has created in several States.
Suchirindia has announced the Papyrus Port, an Egyptian resort-type theme park, about 15 km from the new international airport in Hyderabad, with an investment of Rs 20 crore. Meanwhile, it plans to invest Rs 40 crore for the second phase.
Chandigarh film city project
Parsvnath Developers, the New Delhi-based real estate major, has reportedly pull out of the proposed Rs 800 crore multimedia centre-cum-film city project in Sarangpur near Chandigarh. The project, which was planned by Chandigarh administration, was aimed at promoting cinematic tourism in the union territory (UT).
Officials in the UT administration associated with the Film City project admitted that they have received an application from Parsvnath Developers in which the company has claimed a refund of its initial deposit of Rs 47.75 crore, along with interest.
According to UT officials, the real estate major backed out of the film city project due to the inter-state demarcation of the site and non-removal of two power lines (owned by the Punjab State Electricity Board) till date.
The multimedia film city project had envisaged a film studio, a multimedia park, a multimedia entertainment centre and a multimedia college and research centre. The film city would have also boasted of a digital studio to facilitate film and television production, post-production facilities for digital films, high-tech animation facility, high-tech gaming facility and a cafeteria.
The much-awaited film city project was awarded to Parsvnath on March 1, 2007, and has been mired in various controversies since then.
The agreement for the project was signed on March 1, 2007, and a special subsidiary -- Parsvnath Film City Ltd -- was also floated for implementing the project. Also, the developers had paid Rs 47.75 crore to the UT administration and according to the agreement, the balance amount was to be paid within 90 days of the signing of the agreement. Besides, the site was required to be developed within 36 months. However, Parsvnath officials could not be reached for comment.
Officials in the UT administration associated with the Film City project admitted that they have received an application from Parsvnath Developers in which the company has claimed a refund of its initial deposit of Rs 47.75 crore, along with interest.
According to UT officials, the real estate major backed out of the film city project due to the inter-state demarcation of the site and non-removal of two power lines (owned by the Punjab State Electricity Board) till date.
The multimedia film city project had envisaged a film studio, a multimedia park, a multimedia entertainment centre and a multimedia college and research centre. The film city would have also boasted of a digital studio to facilitate film and television production, post-production facilities for digital films, high-tech animation facility, high-tech gaming facility and a cafeteria.
The much-awaited film city project was awarded to Parsvnath on March 1, 2007, and has been mired in various controversies since then.
The agreement for the project was signed on March 1, 2007, and a special subsidiary -- Parsvnath Film City Ltd -- was also floated for implementing the project. Also, the developers had paid Rs 47.75 crore to the UT administration and according to the agreement, the balance amount was to be paid within 90 days of the signing of the agreement. Besides, the site was required to be developed within 36 months. However, Parsvnath officials could not be reached for comment.
Wednesday, December 24, 2008
Fitch downgrades Unitech's rating
Ratings agency Fitch Ratings on Tuesday downgraded realty major Unitech Ltd's (Unitech) Long-term rating to 'BBB-(ind)' from 'A-(ind)' (A minus) and maintains its negative long-term rating outlook. The downgrade reflects the ongoing delay in the completion of asset sales, and its impact on the company's ability to service its short-term debt obligation, the global credit rating agency said.
The Negative Outlook reflects Unitech's reduced liquidity position, as the company is facing significant maturities during the next six months (principal amount around Rs 27 billion) and the ensuing substantial refinancing risk. The liquidity risks are accentuated by the tightness of the credit environment.
The Outlook also reflects potential further negative pressure on cash flow generation and credit metrics, stemming from a more adverse real estate sector environment than previously envisaged.
"With Rs 15 billion (Rs 1,500 crore) of repayments due in December 2008 and January 2009, Unitech's ability to manage these repayments remains largely dependent on the potential cash flows from the sales of assets and investments," Fitch added.
Further, the next three to six months remain crucial for the company and the current ratings remain contingent upon Unitech's ability to manage its ongoing debt maturities, Fitch noted.
The earmarked asset sales include various completed properties which the company had earlier expected to retain on its books, as well as investments such as telecom. Fitch expects around Rs 1,500-1,600 crore to be raised through these initiatives over the near term. However, any further delays in obtaining these cash inflows would result in further downward pressure on the ratings.
Earlier, on November 11, 2008, Fitch had said that it expected the asset sales to be completed by December 2008, and noted that the unsuccessful completion of the projected asset sales would trigger a ratings downgrade.
The Negative Outlook reflects Unitech's reduced liquidity position, as the company is facing significant maturities during the next six months (principal amount around Rs 27 billion) and the ensuing substantial refinancing risk. The liquidity risks are accentuated by the tightness of the credit environment.
The Outlook also reflects potential further negative pressure on cash flow generation and credit metrics, stemming from a more adverse real estate sector environment than previously envisaged.
"With Rs 15 billion (Rs 1,500 crore) of repayments due in December 2008 and January 2009, Unitech's ability to manage these repayments remains largely dependent on the potential cash flows from the sales of assets and investments," Fitch added.
Further, the next three to six months remain crucial for the company and the current ratings remain contingent upon Unitech's ability to manage its ongoing debt maturities, Fitch noted.
The earmarked asset sales include various completed properties which the company had earlier expected to retain on its books, as well as investments such as telecom. Fitch expects around Rs 1,500-1,600 crore to be raised through these initiatives over the near term. However, any further delays in obtaining these cash inflows would result in further downward pressure on the ratings.
Earlier, on November 11, 2008, Fitch had said that it expected the asset sales to be completed by December 2008, and noted that the unsuccessful completion of the projected asset sales would trigger a ratings downgrade.
65-acre township project in Bangalore
Bangalore-based Orange Properties, a subsidiary of the real estate marketing agency Orange Group, has announced the launch of a 65-acre township project near Devanahalli in Bangalore, where the company offers villas and apartments at the “cost price”. This is the second development project for Orange Group, which was hitherto marketing projects of other builders.
R Vijay, founder and CEO, Orange Group said, “Cost price means prevailing land cost plus the actual cost of construction.”
The four-day offer is set to open on December 25. But from the fifth day of the launch, the prices would see a hike, wherein the company would add its 25 per cent margins, Vijay added.
Phase 1 of the project would see development on 25 acres, with 800 apartments, 270 villas and 45 row houses being planned with sales realisation of Rs 400 crore.
“The villas would be offered from Rs 70 lakh onwards, and we are offering an international luxury sedan free for the first 50 bookings,” Vijay said.
The size of apartments in the township would be 800-1,350 sq ft, starting from less than Rs 20 lakh. The company plans to have 12 launches next year; the next project would be launched in February.
The company has earmarked Rs 32 crore for advertisements till March, Vijay said.
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http://cchaturvedi.blogspot.com/2008/12/65-acre-township-project-in-bangalore.html
R Vijay, founder and CEO, Orange Group said, “Cost price means prevailing land cost plus the actual cost of construction.”
The four-day offer is set to open on December 25. But from the fifth day of the launch, the prices would see a hike, wherein the company would add its 25 per cent margins, Vijay added.
Phase 1 of the project would see development on 25 acres, with 800 apartments, 270 villas and 45 row houses being planned with sales realisation of Rs 400 crore.
“The villas would be offered from Rs 70 lakh onwards, and we are offering an international luxury sedan free for the first 50 bookings,” Vijay said.
The size of apartments in the township would be 800-1,350 sq ft, starting from less than Rs 20 lakh. The company plans to have 12 launches next year; the next project would be launched in February.
The company has earmarked Rs 32 crore for advertisements till March, Vijay said.
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badgetype="large"
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http://cchaturvedi.blogspot.com/2008/12/65-acre-township-project-in-bangalore.html
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