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.
Monday, December 29, 2008
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-à-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-à-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.
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