To transform Indian real estate sector into the best paradigm in the world is vision 20-20" said Mr Anuj Puri, Conference Chairman & Chairman and Country Head, Jones Lang LaSalle Meghraj at the Conference on Indian Real Estate 20-20 organised by the Confederation of Indian Industry (CII)
If you are
planning to buy a house, grab it before July, as realty prices are set
to increase later. The service tax of 3.3%, announced in the Budget,
will be effective on your home from July as the amendments to the
Finance Bill will be put into effect in June. Moreover, banks have
decided to increase interest rates in the range of 0.25-0.5 percentage
points on home loans, which could further be hiked in the forthcoming
credit policy. Companies including realty majors like DLF, under the
aegis of Delhi-based real estate body National Real Estate Development
Council (Naredco), will soon approach the FM for a rollback of service
tax.
The property prices are expected to go up with real estate
companies passing on the additional burden to buyers. Effectively,
someone buying a house property in Delhi will have to pay a service tax
of 3.3% on the price of the accommodation and also a stamp duty of 8%
as a sale of immovable property. The 3.3% tax will not include the
amount to be paid towards special charges like garden facing or
community hall facility as these charges will be taxed at 10% of the
total charges. However, Sanjay Chandra, MD of country’s second-largest
realty firm Unitech says an increase in interest rates is unlikely to
affect the demand as the increase is only in trigger rates and hence
there is no change in effective interest rates.“The service tax will
have some marginal impact, but the market will absorb that for two
reasons. One, the change in personal tax slabs will leave more
disposable income in the hands of consumer and second, the better
prevailing economic conditions are likely to result in at least 10%
increase in the salaries of the working class for the next financial
year. These two facts will more than offset the marginal impact of
service tax, which is expected to be 2% to 3%,” he said.
When
contacted, Naredco president and realty company Omaxe’s group chairman
Rohtas Goel said, “We will hold a meeting of the association to discuss
the Budget proposals, particularly levying of the service tax on
housing, which will have a negative impact on the realty sector.”
However, finance ministry officials have said they won’t entertain any
request for change in the Budget proposal. Central Board of Excise and
Customs member YG Parandhe said, “We are not taking up the issue as it
stands now” when asked if there is a possibility to relook at the
proposal.
Dotted with the sprawling campuses of
information technology (IT) firms such as Microsoft Corp. and Wipro
Ltd, Hyderabad’s fast-moving growth corridor—the Gachibowli area—looks
skeletal with half-done buildings, yellow construction cranes and giant
billboards that promise delivery of homes on time.
Hyderabad was hailed some years ago as
one of India’s hottest property destinations, with firms such as
US-based Tishman Speyer Properties and Malaysia’s Sunway City Bhd
coming in to launch their maiden projects in the country.In its present condition, Andhra Pradesh’s capital city remains the lone realty victim of the slowdown.“Other cities are already on the
recovery route. But Hyderabad has been in the news for all the wrong
reasons,” said George Johnson, city head (firm management), Jones Lang
LaSalle Meghraj, a property advisory.The downturn perhaps shook Hyderabad more than it did other large cities due to certain disturbing events.The first was the unravelling of a
multi-crore accounting fraud at Hyderabad-headquartered Satyam Computer
Services Ltd last January, followed by the death of chief minister Y.S.
Rajasekhara Reddy in a helicopter crash in September.And just as the sector was beginning to
recover, the struggle for a separate Telangana state that includes
Hyderabad, intensified.
“Whether the market bounces back
depends on if they can control the Telangana agitation,” said N.R.
Aluri, managing director, NCC Urban Infrastructure Ltd. “The
residential segment particularly looks uncertain though we are
expecting some demand in the budget category.”City-based NCC Urban, a subsidiary of
Nagarjuna Construction Co. Ltd, has moved its focus to Bangalore, where
it is building four projects, compared with one in Hyderabad.NCC’s signature project, a 400-acre
mixed development on Hyderabad’s outskirts in Tellapur, in a joint
venture with Tishman Speyer India, has been put on hold. Its only
ongoing project in the city, Nagarjuna Residency in Gachibowli, has
been cropped from 12 blocks to six.Following the 1990s’ IT boom in the
city, Hyderabad’s realty market reached its peak between 2005 and 2007,
with rising land prices triggering a wave of speculative buying.
Property consultants say the key
problems with Hyderabad have always been its unplanned real estate
growth, demand-supply mismatch and steep land prices.In 2007, for example, a consortium of
developers bought 5.8 acres in the city’s posh Jubilee Hills area for
Rs58 crore an acre. The project, which hasn’t been launched yet, would
need to sell at Rs15,000 per sq. ft at least to be viable, said a
property consultant, who didn’t want to be named.“Everyone was buying large land tracts
and planning big projects. Most projects launched in the last two years
are nowhere near completion,” said P. Premkumar, member, AP Real Estate
Developers Association.Premkumar’s firm, Doyel and Co., part
of Opus Developers and Builders Pvt. Ltd, is building Sunway Opus Grand
with Malaysia’s Sunway City. The Rs1,700 crore township in Hitec City,
a technology hub in Hyderabad, was announced in 2007 but construction
hasn’t started yet though bookings have begun. It will have luxury
homes and is Sunway City’s maiden project in India.Yap Chun Hua, chief operating office of Sunway Opus, refused to talk about the project citing company policy.
According to Jones Lang LaSalle
Meghraj, around 5 million sq. ft of commercial space in the city is
expected to come into the market in 2010, of which a little more than 3
million sq. ft is likely to be absorbed.Many buildings that were supposed to be operational in 2009 are still under construction, it added.S. Pochender, director and chief
executive of Lanco Hills Technology Park Pvt. Ltd, a mixed-use project
in Hyderabad, said the Telangana struggle ripped apart the local
property market in December, just when the city was seeing green shoots
of a revival.Around 400,000 sq. ft earmarked for
office space in the Lanco Hills project is yet to find takers, after
five-six nearly-finalized deals fell through in December, he said.
Around 2 million sq. ft of retail space, including a 14-screen
multiplex, is also going slow. “We have closed 60% of bookings for the
homes, the rest is still there.”Jones Lang LaSalle Meghraj’s report
says only 0.72 million sq. ft of retail space in the city will be
launched in 2010, and demand will be dormant.
Bangalore, some 550km from Hyderabad,
has been gaining from Hyderabad’s loss. Not surprisingly, many
investors want to exit projects in Hyderabad or delay investment
commitments.Nervous of getting stuck, Naresh C.
Reddy, an independent investor, who also runs his own pharmaceutical
business in Hyderabad, exited from three premium housing projects in
the Madhapur area in the last week of November, when the Telangana
movement was gathering steam.“I made a loss compared to the initial
investment that I had made in mid-2008. But I am now talking to
builders in Bangalore because I think the city is safer to invest in,”
said Reddy.Irfan Razak, promoter of
Bangalore-based Prestige Estates Projects Pvt. Ltd, said he, too, has
put on hold a villa project in Hyderabad, originally planned for a 2009
launch.
Dotted with the sprawling campuses of
information technology (IT) firms such as Microsoft Corp. and Wipro
Ltd, Hyderabad’s fast-moving growth corridor—the Gachibowli area—looks
skeletal with half-done buildings, yellow construction cranes and giant
billboards that promise delivery of homes on time.
Hyderabad was hailed some years ago as
one of India’s hottest property destinations, with firms such as
US-based Tishman Speyer Properties and Malaysia’s Sunway City Bhd
coming in to launch their maiden projects in the country.In its present condition, Andhra Pradesh’s capital city remains the lone realty victim of the slowdown.“Other cities are already on the
recovery route. But Hyderabad has been in the news for all the wrong
reasons,” said George Johnson, city head (firm management), Jones Lang
LaSalle Meghraj, a property advisory.The downturn perhaps shook Hyderabad more than it did other large cities due to certain disturbing events.The first was the unravelling of a
multi-crore accounting fraud at Hyderabad-headquartered Satyam Computer
Services Ltd last January, followed by the death of chief minister Y.S.
Rajasekhara Reddy in a helicopter crash in September.And just as the sector was beginning to
recover, the struggle for a separate Telangana state that includes
Hyderabad, intensified.
“Whether the market bounces back
depends on if they can control the Telangana agitation,” said N.R.
Aluri, managing director, NCC Urban Infrastructure Ltd. “The
residential segment particularly looks uncertain though we are
expecting some demand in the budget category.”City-based NCC Urban, a subsidiary of
Nagarjuna Construction Co. Ltd, has moved its focus to Bangalore, where
it is building four projects, compared with one in Hyderabad.NCC’s signature project, a 400-acre
mixed development on Hyderabad’s outskirts in Tellapur, in a joint
venture with Tishman Speyer India, has been put on hold. Its only
ongoing project in the city, Nagarjuna Residency in Gachibowli, has
been cropped from 12 blocks to six.Following the 1990s’ IT boom in the
city, Hyderabad’s realty market reached its peak between 2005 and 2007,
with rising land prices triggering a wave of speculative buying.
Property consultants say the key
problems with Hyderabad have always been its unplanned real estate
growth, demand-supply mismatch and steep land prices.In 2007, for example, a consortium of
developers bought 5.8 acres in the city’s posh Jubilee Hills area for
Rs58 crore an acre. The project, which hasn’t been launched yet, would
need to sell at Rs15,000 per sq. ft at least to be viable, said a
property consultant, who didn’t want to be named.“Everyone was buying large land tracts
and planning big projects. Most projects launched in the last two years
are nowhere near completion,” said P. Premkumar, member, AP Real Estate
Developers Association.Premkumar’s firm, Doyel and Co., part
of Opus Developers and Builders Pvt. Ltd, is building Sunway Opus Grand
with Malaysia’s Sunway City. The Rs1,700 crore township in Hitec City,
a technology hub in Hyderabad, was announced in 2007 but construction
hasn’t started yet though bookings have begun. It will have luxury
homes and is Sunway City’s maiden project in India.Yap Chun Hua, chief operating office of Sunway Opus, refused to talk about the project citing company policy.
According to Jones Lang LaSalle
Meghraj, around 5 million sq. ft of commercial space in the city is
expected to come into the market in 2010, of which a little more than 3
million sq. ft is likely to be absorbed.Many buildings that were supposed to be operational in 2009 are still under construction, it added.S. Pochender, director and chief
executive of Lanco Hills Technology Park Pvt. Ltd, a mixed-use project
in Hyderabad, said the Telangana struggle ripped apart the local
property market in December, just when the city was seeing green shoots
of a revival.Around 400,000 sq. ft earmarked for
office space in the Lanco Hills project is yet to find takers, after
five-six nearly-finalized deals fell through in December, he said.
Around 2 million sq. ft of retail space, including a 14-screen
multiplex, is also going slow. “We have closed 60% of bookings for the
homes, the rest is still there.”Jones Lang LaSalle Meghraj’s report
says only 0.72 million sq. ft of retail space in the city will be
launched in 2010, and demand will be dormant.
Bangalore, some 550km from Hyderabad,
has been gaining from Hyderabad’s loss. Not surprisingly, many
investors want to exit projects in Hyderabad or delay investment
commitments.Nervous of getting stuck, Naresh C.
Reddy, an independent investor, who also runs his own pharmaceutical
business in Hyderabad, exited from three premium housing projects in
the Madhapur area in the last week of November, when the Telangana
movement was gathering steam.“I made a loss compared to the initial
investment that I had made in mid-2008. But I am now talking to
builders in Bangalore because I think the city is safer to invest in,”
said Reddy.Irfan Razak, promoter of
Bangalore-based Prestige Estates Projects Pvt. Ltd, said he, too, has
put on hold a villa project in Hyderabad, originally planned for a 2009
launch.
The Direct
Tax Code (DTC) is a major evolutionary step in the direct tax history
of the country, which is all set to change the entire financial
landscape of India.
As it spells major change, it will require a fairly in-depth study
before all its implications can be understood and assimilated. On the
face of it, DTC may have benefited Indian tax payers due to some of its
moves, but it looks like a dampener for the Indian realty industry.
Moreover, it is likely to undergo many changes and corrections before
it is finally enacted. Hence commenting on DTC is a minefield. With
these qualifications let us analyse some aspects that will apparently
impact the property market. First, there is a significant change in the
way income from house property is calculated under DTC, most of which
is adverse from the point of view of residential property investments.
1. Tax on every property: Current tax provisions provide for paying
tax with respect to every property (except a self-occupied property)
whether let out or not, based on contractual rent and where that is not
available then based on a reasonable rent. There is also provision for
a vacancy allowance in case of property that has been previously let
out at any time.Under the DTC Bill, tax is payable on all properties on
the basis of a higher contractual rent or presumptive rent. The
provision for vacancy allowance has also been deleted. In most cases
the local authorities have now moved to a market value based rateable
value. Possibly the presumptive rate has been kept at a middle value of
6 per cent considering that commercial properties can be rented out at
around 8 per cent of the market value. Of course this simplicity works
against residential property ownership. Since the income is higher of
contractual rent or presumptive rent the end result will be taking
completely non-existent income as income. Thus whether or not a tenant
is available for the premises, it forces the owner to pay tax on
income.Without the protection of the vacancy allowance that is
available under the current tax laws this single change will drive
investors out of the market. Some may argue that not having investors
may not necessarily be a bad thing but it may not be an ideal situation
either.
2. Unclear clause: The words for not applying this income clause to
one non-let-out property (equivalent to a self-occupied property under
the current provisions) are a little unclear and if left unchanged can
jeopardise even this small relief.
3. Gross rent: For let out properties the standard deduction has
been reduced from 30 per cent to 20 per cent of the gross rent.
4. Deduction: Deduction is available on all properties for local taxes and service tax to the extent paid.
5. No deduction for interest: There is no deduction for interest for
non-let-out properties where the income is taken as nil unlike the
current provision where this is available up to Rs 1, 50,000.
6. Principal payment: There is no provision for deduction on the principal payment of the loan taken to buy a home.
7. Commercial property: As far as commercial property is concerned
it is now clear that renting out property in whatever guise will now be
taxable as income from house property and not as business income or
income from other sources. The impact is that no deduction for any
other expenses will be allowed except local taxes, service tax and
interest on loan.
8. Joint properties: The good thing is that calculations for jointly
owned properties has been made absolutely clear as also the treatment
of interest payable for loans taken to re-pay the original home loan.
All in all, the real killer here is the presumptive rent. Clearly,
this is a stiff annual wealth tax on owning a residential house
property in the guise of creating an objective benchmark
for the rental potential of a residential house property. With changes
in capital gains tax as well as the current rental laws, which
discriminate against landlords, and the stiff service tax on rentals,
owning residential property except one for self-occupation will be a
fairly taxing thing. These provisions, if enacted, are likely to have a
very large impact on the residential property market. Residential
properties purchased for investment purposes or ownership of second
properties are likely to go down significantly. Still these are early
days so let us see what actually gets enacted into law. Till then you
move on with your decisions of home buying!http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=Articles&nid=1112
The
country’s largest real estate developer, DLF, sold apartments worth Rs
1,000 crore in December. This is the highest monthly sale the company
has recorded in its history. There are many developers like DLF who
have seen a surge in the sale of apartments across the country in the
quarter ended December, especially in the luxury and semi-luxury
category.A large chunk of DLF’s sales are also from the luxury and
semi-luxury segments. It sold 76 apartments of Rs 5 crore each in The
Magnolias, Gurgaon, netting nearly Rs 400 crore. The project has
apartments of 5,825 sq ft each and duplexes and penthouses of 9,000 to
10,000 sq ft each.It made another Rs 200-300 crore each in its
relaunched projects, DLF Belaire and Park Place, in Gurgaon. Belaire
had a price of Rs 2-3 crore each and Park Place of Rs 1.25-1.5 crore.
Indiabulls Real Estate has sold 100 apartments in its 65-storey
‘Indiabulls Sky’ in the Lower Parel area of Mumbai in the past four
months. It has also recently launched Indiabulls Sky Suites with
full-age advertisements, promising ‘A head in the clouds experience’’.
While, apartments in Sky were priced at Rs 6.75-22.5 crore, depending
on the size, Sky Suites are expected to be higher.Indiabulls is also
working on a super-luxury, ‘By invitation only’, Indiabulls Sky Forest,
where homes are more than 10,000 sq ft each and priced 10-20 per cent
higher than Sky projects.Buoyed by response for its premium housing
projects, Orbit Corporation, another Mumbai-based developer, says it
will launch one luxury project in the city every quarter. Orbit has
sold off its first lot of 18 flats in Orbit Terraces — a premium
housing project in the Lower Parel area where apartments ranged from Rs
3.3 crore to Rs 6.6 crore — within 17 days of its launch in September.
It sold another dozen flats in the same building later.Orbit earlier
sold its Orbit Arya project in South Mumbai, where apartments were
priced at Rs 10-15 crore, within a month.
The increasing sales
are a result of many factors, besides general economic recovery. “A
host of reasons have helped property sales. Interest rates are down,
property prices are down 30 per cent from the peak and markets are
doing well. All these are giving confidence to buyers to buy premium
homes,” says Rajeev Talwar, executive director, DLF.Agrees Raminder
Grover, chief executive of Homebay Residential, part of Jones Lang
LaSalle Meghraj: “Post slowdown, this segment has clearly picked up and
we must have marketed and sold 60-70 of homes of Rs 5 crore and
above.”Developers are cashing on this demand by offering even more
expensive and exclusive apartments. For instance, Pune-based Kumar
Builders is planning to build ‘sky villas’ in the Worli area of Mumbai,
where the first villa will start from the twelfth floor. Called Kumar
Couture, it will overlook the Bandra-Worli Sea Link and will be priced
at Rs 30 crore each, for about 8,000 sq ft.
Beyond Delhi and Mumbai
In Hyderabad, Dax Properties Pvt Ltd (part of Countryside Realtors Pvt
Ltd) has sold 65 to 70 villas in its Golf Retreat Project since the
launch last month. Costing Rs 1.2-2.5 crore each, they vary from 500 sq
yards to 2,000 sq yards.“There are takers from all over the country,’’
says Hassan, managing director of Dax. Another developer, Aditya
Housing and Infrastructure Development Corporation, has sold 20 villas
out of 30 at Empress Park in the Jubilee Hills area of Hyderabad. Each
villa costs Rs 3.5 crore.A few days earlier, Aditya Housing announced
Mount Castle at Nandagiri Hills in the city, where each floor was
occupied by a single flat. Of the 24 it plans to develop, it has
already sold five.In Pune, Kumar Builders sold 77 flats within a short
span of time in its premium project, 45 Nirvana Hills, where apartments
are priced above Rs 1 crore. The company plans to launch two or three
luxury housing projects — flats, bungalows and row houses — in prime
localities like Kalyani Nagar and Hadapsar.Bangalore is also likely to
see more luxury projects in the category of Rs 4 crore-plus by
developers such as Prestige and Nitesh Estates, as developers have seen
good response for the premium products in the past three months.http://www.maaproperties.com
With weeks
of agitation continuing across Andhra Pradesh over the issue of
statehood for Telangana, transactions in the real-estate sector have
nearly come to a standstill in Hyderabad and other major towns, with
buyers opting to wait and watch.After a gloomy recession-hit beginning
to 2009 and major price correction, the sector had begun to gradually
show signs of recovery in the last few months. However, the continued
uncertainty over the statehood issue has set the clock back, according
to representatives from the realty sector.The President of AP Builders
Forum, Mr C. Shekhar Reddy, said the sector has taken twin blows in the
form of economic recession and also drop in prices due to slackening
demand. “The prices of residential properties have dropped by about 30
per cent in the last 12 months. The flexibility to go down any further
has gone,” Mr Reddy said.The Managing Director of Koncept Ambience, Mr
M.P. Agrawall, said: “While realtors are concerned about the ongoing
agitation as transactions have come to a halt, genuine buyers are keen
They expect some more downslide before buying.”The notion that there is
more supply than demand is incorrect, he said. The economic downturn
and lack of buyer interest in the first half has deterred many
developers from venturing into new projects.The available supply will
take care of the demand over the next six months, and “suddenly we will
realise that there is need for more projects particularly in the
affordable segment, which is in short supply,” Mr Reddy said.The
Chairman of Confederation of Indian Industry, AP region, Mr Y. Harish
Chandra Prasad, said: “The agitation is bad for the infrastructure
sector and real estate players. It sends wrong signals to investors. We
hope the issue settles down soon and the uncertainty is put behind,
helping resume normal business. The offtake of commercial property too
could be hit as companies and establishments adopt a cautious
wait-and-watch approach.”
Speculative buying
The Chief Executive Officer of Lanco Hills, part of the Lanco Group, Mr
S. Pochendar, said that speculative buying was missing in the market in
the last six months. This augured well for the sector as the slowdown,
coupled with demand-driven pricing, has helped stabilise prices.“Before
the build-up to the current agitation, market was already subdued and
bottomed out at every nook and corner of the twin cities. The number of
takers too had come down. The speculative investment was totally out.
The prices too had reached their lowest levels in the last four years.
I don't see any more surprises in the sector,” Mr Agrawall said.Since
the recent agitation, genuine buyers hope to see some more downslide,
which is unlikely. There is also no likelihood of flight of investors,
as some speculate. Investors invest wherever there is opportunity, not
just in Hyderabad, but other States and in some overseas markets, Mr
Agrawall said.However, some players said prices will go up in
Vijayawada and Visakhapatnam as some of the speculative investors could
prefer these growing cities to Hyderabad in the near term.Mr Shekhar
Reddy, however, believes this is not true. From the interaction he has
had with some of the project developers, they see this as a passing
phase of their business cycle and are okay waiting for this phase out.
“Even assuming that a separate state is formed, how will this change
their existing business plans?” he asked. “Due to slowdown, with scores
of real-estate developers delaying taking up new projects and
concentrating on completing the ongoing ones, in the next six to 12
months we will suddenly face a situation where we will have increased
demand and shortage of supply. This could potentially push up prices
faster than we anticipate,” Mr Agrawall argued.Mr Prasad said the
ongoing impasse could also affect the prospects of some of the major
infrastructure projects such as the Hyderabad metro rail and foreign
direct investment. Banks and financial institutions base their project
estimation on the business prospects and valuation of real-estate. And
if this comes down, they could be wary of funding new projects.
Impact on infra projects
Asked if some of the projects are in trouble due to liquidity crunch,
Mr Shekhar Reddy said the situation is no different from the one about
12 months ago. In fact, several private equity players have set up
their teams to look at potential buyout candidates or investment
opportunities.“The agitation has had a negative impact on the sector.
However, we are looking at the next year with much optimism and hope
that the current stalemate is resolved. Once that happens, all those
who are keen to own a property will be back hunting for properties,” Mr
Pochendar said.For the real estate developers, reality has sunk in.
From a stage a couple of years ago, where on the day of Bhoomi Puja
most apartments would see buyer interest, realtors are now faced with
the challenge of convincing potential buyers who prefer to wait and
watch. This happens when it is a buyer's market, Mr Reddy said.
Hyderabad's real estate sector was in a state of shock on
Thursday, just hours after the Centre conceded to the demand for a
separateTelangana state. Speculating that the move would further dampen the
already crippled industry, realtors were seen making their own calculations
about the future of their business in the city. Apart from a few optimistic
voices, most realtors opined that the T decision would spell doom for real
estate in Hyderabad and result in a steep fall in the property value.
"We will go back at least by five years in terms of
growth," said Khaja Asif Ahmed of Stellar Project Management Consultant,
adding, "It will take at least two to three years for the political unrest
to settle and till then no investor from outside would put his money
here." According to his prediction, the industry, which is still battling
the recession ghost, is set to hit a new low over the next few months.City
realtors say that Hyderabad, as part of Telangana, would also disrupt the flow
of sentiment-driven investments. "So far people from all over the state
invested in Hyderabad because of its status as the capital of Andhra Pradesh.
But if it becomes part of Telangana, people would think twice before picking up
property here," said a Kukatpally-based realtor Madhusudan admitting that
it would indeed be a long haul before the sector gains momentum. "Until a
clear separation takes place, there will be no new investments,"
Madhusudan said.
A common sentiment that seemed to be riding high among most
players from the sector was that of ‘protecting Hyderabad' from the turmoil by
declaring it as the joint capital of two states. "Our fear of stagnation
in transactions (purchases) can be best addressed through this move. That way
the value of properties in the city would remain unaffected and investors too
would feel secure," said Ashwin Rao, director, Primus Developers. Though
Rao is one among the few optimistic builders who feel that the industry would
be back on track, only after an initial glitch of a few months, he says that
the common capital stand would be ideal to arrest the slump in the realty
business.http://maaproperties.com
India
leads the pack of top real estate investment markets in Asia for 2010,
according to a study by PricewaterhouseCoopers (PwC) and Urban Land
Institute, a global non-profit education and research institute. The
report, which provides an outlook on Asia-Pacific real estate
investment and development trends, points out that India, particularly
Mumbai and Delhi, are good destinations. Residential properties are
viewed as more promising than other sectors and Mumbai, Delhi and
Bangalore top the pack in the hotel ‘buy’ prospects as well.The study
is based on the opinions of over 270 international real estate
professionals, including investors, developers, property company
representatives, lenders, brokers and consultants. Since the global
economic meltdown, asset markets in the Asia-Pacific region have been
holding up surprisingly well compared with their peers in Europe and
the US. While pricing and rentals in the region fell steeply in 2008
and early 2009 in line with those in the West, markets across the
region were boosted in the second half of the year by the remarkable
resilience of the Chinese economy, which was buoyed by a series of
fiscal and monetary stimulus measures.
As a result, many Asian
markets have begun to flash positive signals toward the end of 2009.
Transaction volumes have rebounded, although from a very low base, led
overwhelmingly by China, the report said. “The relatively stronger
fundamentals and the lack of dependence on foreign demand are seen as
key advantages as India has managed to mitigate the severe recession
that has hit most other Asian countries. “The recapitalisation by
players in equity markets across Asia has been successfully replicated
by some Indian developers, which has helped ease the liquidity
stresses,” said Mr Gautam Mehra, India Leader for Real Estate Practice,
PriceWaterhouse Coopers. Unlike the US and Europe, distress sale in
Asia had been relatively minimal. This was due to several factors,
including a relative abundance of liquidity; low loan-to-value ratios,
leaving borrowers less vulnerable to loan servicing problems when the
prices declined, the report said.Further, Asian banks remain
well-capitalised, having experienced few major losses from derivative
investments and also because of the ability of many large investment
institutions to recapitalise via the capital markets, (particularly in
Australia and Singapore) allowing them to pay down debt. Despite the
recent bullish atmosphere, rebounds in most Asia-Pacific markets (with
the exception of China) appear tentative and fragile. Although
Asia-Pacific governments will probably be able to sustain high rates of
liquidity for the foreseeable future, their near term prospects are
probably tied to developments in the West and in particular the US,
where de-leveraging is far from over.
“The idea that the
recession is likely over gives rise to the widespread notion that
global economies will now revert gradually to the same trajectories as
in the past, which is normally what happens when recessions end,” said
the ULI Chief Executive Officer, Mr Patrick L. Phillips. He said the
aftermath was likely to be different because the imbalances that led to
the global downturn remain embedded in the system and could not be
quickly eliminated. Moreover, with spending by the Western consumers no
longer acting as the primary engine of global economic growth, a new
driver was needed to boost the world’s economy, and, in turn, the
global real estate industry....http://www.maaproperties.com
Lanco
Infratech has decided to move out of real estate sector to focus on the
core area of power generation, besides taking up engineering,
construction and procurement contracts, and orders for roads, highways
and ports. Company’s managing director G Venkatesh Babu told Financial
Chronicle on Sunday that the firm will, however, complete the two
luxury housing projects in Hyderabad and Chennai.“We have decided not
to take up new realty projects going forward, as we have realised that
there are too many players in the sector,” Babu said. He said the ever
rising power shortage in the country and comparatively lesser number of
players makes this sector lucrative.http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=News&nid=1088
Lanco is developing a Rs
5,500 crore project — Lanco Hills — spread over 100 acres in Hyderabad.
The project includes 15 residential towers, special economic zones and
various commercial properties.The firm has also planned development of
Lanco Horizon Properties at Chennai. The township is planned over 80
acres.Last year, the company had lost about 250 customers of its
residential apartments in Hyderabad during the market meltdown. The
customers, mostly expatriates, cancelled bookings after paying 40 per
cent of the sum required for construction of the apartments.Each flat
in the project costs around Rs 1.5 crore. Following the withdrawal, the
company slowed down the project.
Babu said at present the
company has a power generation capacity of 950 mw. This includes the
368-mw Kondapalli project in Andhra Pradesh, 120-mw Aban project and a
300-mw facility at Amarkantak in Chhattisgarh.The company expects to
increase the capacity to 4,000 mw in two years. The company also plans
to go alone in bidding for upcoming ultra mega power projects. It had
bid for the last UMPP at Tilaiya with Malaysia’s Genting. They later
withdrew the bid.
To bring
the Indian property industry on par with the global real estate sector,
the Indian parliament is gearing up to pass the much talked about real
estate regulatory bill in the winter session. The industry is keenly
watching out for this one as the first draft was found to be faulty and
rather lopsided , excluding the government bodies from its purview. So
while the experts feel that it is time to have a single-point
regulatory body on the lines of SEBI or TRAI, which would prove
beneficial in the long run to the endusers and developers, there is
also a cry for bringing total objectivity and professionalism in the
workings of the body, to truly achieve its goal. Developers also point
out the dangers of overregulation in an industry that already faces
several stumbling blocks.The bill seeks to grant approvals to projects
on certain parameters and also expedite all the approval processes
mandatory for projects to take off. It is expected to help improve
transparency in the sector by rating developers on their financial
strength in terms of turnover, liquidity and profitability, scale of
operations, intellectual expertise based on the qualification and
experience of the management team, and past performance.
According to Ashutosh Limaye, associate director (Strategic
Consulting), Jones Lang LaSalle Meghraj, “The stock market has SEBI to
provide guidelines, define conduct and processes, provide a redressal
system for both buyers and sellers and install necessary consistency
and standardisation. The proposed real estate regulatory body intends
to do the same for the Indian property market, which currently presents
a rather under-organized picture.” Deepak Parekh, chairman of HDFC, had
expressed the urgent need for a real estate regulatory body, which
should play the role of a monitor for promoting and overseeing real
estate reforms, ensuring transparency in sales and protecting buyers
from a fraudulent case, if any. Parekh recommended that the state
housing boards should also be brought within the ambit so that there is
complete transparency in its working mechanism, the checks and balances
are well achieved from every quarter.The developers have welcomed the
move too, but not in its current draft form. Kumar Gera, chairman of
CREDAI, India, says, “The intention is good but a lot of thought needs
to go into formulating the role of the body, otherwise the effect can
be counter-productive . Two main intentions are stated in the preamble:
protection of consumers’ interest and speeding up the clearances to
facilitate the smooth development of real estate. There are enough
provisions to achieve the first objective, but I haven’t seen anything
regarding the second. It needs inclusion of processes. In the present
form it is likely to create more processes and hence obstacles.
The Urban Land Ceiling act was also formulated with a noble intention,
but the outcome was disastrous.” R Vasudevan, MD of Vascon Developers
has a similar view: “I think the intention is very good if followed in
its spirit with modification to include the process of speeding up
approvals. It will revamp a sluggish and a beleaguered system. In fact,
no reputed developer would want a short cut to achieve his end, as his
intention would be to become a long-term player. It is not in his
interest to delay projects and offer bad products, as it will tarnish
his image and his brand. Hence this is welcome but only if it fulfils
its intent. A professional approach is the need of the hour now for all
of us.”Sunny Bijlani, director, Supreme Universal, which has projects
in Pune and Mumbai, says, “It is fine with us to have a regulatory
body, which helps bring in transparency to the customers.We are more
than happy. But they have to bring more changes in the rating system to
actually do proper justice to the customers, by doing a complete
financial analysis of the developers, and not just by collecting some
data. Secondly, it should be a single point for all clearances and NOCs
so that the project starts on time. Most delays are caused by
non-availability of clearances from the government authorities.” Real
estate is a major contributor to GDP growth and employment generation.
The minister of urban development acknowledges this fact and feels that
a single regulatory body at the state level is most needed, for faster
approvals , besides faster delivery of projects, accountability of the
project developers, professionalism and finally loan acquisition to
make affordable housing a reality.
Aggressive pricing and festival season discounts are beginning to draw home buyers in the Greater Hyderabad Municipal Corporation (GHMC) area, including surrounding municipalities and satellite townships. With the market correcting by nearly 30-40 per cent depending upon the location, be it core city area or peripheries, buyers have begun to not only evince interest but are also entering into deals, according to some real-estate companies in the city.The President of Greater Hyderabad Builders Federation, Mr C. Prabhakar Rao, said some of the large builders who have taken up integrated township and mega projects are those who are facing the heat of servicing loans. This has forced them to bring down prices by about 30-40 per cent to bring back buyer interest. Prices had shot up to unrealistic levels due to the boom in the real-estate market. That was the time when no one doubted the market potential and continued to invest, a good number of them for speculation.
However, after the correction, buyers, who were waiting for lowering of prices, realised that the market had stabilised and was not likely to go down further. They were now coming back into the market with renewed interest, he said. Significantly, due to good supply, buyers have the choice to select a property of choice, that too in a project that is at an advanced stage of construction instead of investing in just a coming up venture or one that is in a proposal stage.The Chief Executive Officer of Cybercity Builders and Developers, Mr Uttam Korupolu, told Business Line that the market now reflects a positive mood with buyers looking at projects that are attractively priced. Citing the company’s project near Hitech City, wherein apartments are priced at Rs 2,500 per sq.ft in gated community environs, Mr Uttam said that in barely months of launching the project, all the 400 apartments have been booked. This is because projects of similar nature were earlier priced anywhere between Rs 3,500 and 4,000 per sq.ft. Buyers now see value in such properties and are able to relate to them.
They also know that the market has found its bottom, he explained. “Interaction with some of the buyers shows that nearly 25 per cent of those who had booked their properties are actually speculating in the hope that the market will again find its way up,” Referring to the pattern in the core city area, Mr Prabhakar Rao said that the cost per sq.ft now at about Rs 3,000 to Rs 4,000 per sq.ft depending upon the location of the property and the stage of development.In fact, these were ruling 30-40 per cent higher about 18 months ago. Significantly, small developers who have five floors of built-up structures and relatively fewer number of apartments compared with high-rise projects in the city, are not budging on prices as they have less exposure to loans. It is the large builders who have exposure to bank loans and facing the heat of servicing them who are forced to lower their prices. It is not surprising to see some of the larger developers such as DLF, Mantri Housing, Meenakshi, to name a few, being among those who have priced their projects attractively to woo home buyers. Many other larger developers too are looking at fine-tuning their new ventures, he said...http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=News
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DLF Ltd
has been conferred the Best Global Developer Award for 2009 by
Euromoney magazine at Euromoney’s Fifth Annual Real Estate Awards - the
most prestigious awards in global real estate. Further, DLF has also
won the awards for Best Developer in Asia and Best Developer in India.
The award ceremony was held in London amidst the senior management of
leading global leaders. DLF won the honour for the best global
developer services even with tough competition from other nominations,
such as CapitaLand and ProLogis.Commenting on the receipt of the award,
K P Singh, chairman, DLF Ltd, said, “There is tremendous prestige and
honour attached to these awards as they acknowledge the best of the
best in the real estate industry. To be named as the best developer,
not just in India, but across the globe, is definitely an achievement.
It fortifies our vision to be a world - class real estate developer and
provide best quality developments.”
Euromoney is the world’s
leading financial markets magazine. Clive Horwood, editor of Euromoney,
said, “In an increasingly challenging financial environment, the
winners of the 2009 Euromoney Real Estate Awards are those that
exhibited the ability to react at speed, innovate, and make best use of
the inherent strengths of their organisation. Through the real estate
poll, the market has recognised the achievements of these institutions
in the face of difficult market conditions, which is why the awards are
so richly deserved.”Euromoney’s annual Real Estate Survey canvassed the
opinions of real estate developers, advisors, financial institutions,
investors and end-users worldwide, who were asked to name which firms
they thought were best at providing various real estate products and
services in their market in the last 12 months. While DLF was accorded
third position in these awards last year, it moved to being named the
best global developer this year.
A month
after a Company Law Board ordered the handing over of the erstwhile
Teja Raju promoted Maytas Infra to IL&FS, its chairman Ravi
Parthasarathy finally took over the reins of Maytas Infra as chairman
on Tuesday. Parthasarathy takes charge following completion of the
transition process as per SEBI guidelines with effect from September
29. The government has also recalled two out of its four nominees from
the Maytas Infra board with effect from Tuesday. While K Ramalingam and
OP Vaish have been recalled, Ved Jain and Anil Agarwal will continue to
remain on the board of the company.
With this, IL&FS has
formally taken over as the new promoter of Maytas Infra, which was
being run by government -appointed board comprising chairman K
Ramalingam and three other directors since March 2009. In the aftermath
of the Satyam scam, the operations of Maytas Infra, then promoted by
Ramalinga Raju's elder son Teja Raju, had come to a grinding halt. The
CLB had in its order issued last month to hand over the company to
IL&FS, had ordered Maytas Infra vicechairman and CEO Teja Raju,as
well as his family friend B Narasimha Rao to step down from the
company's board. Since then IL&FS had made an open offer in early
September to acquire an additional 20% stake in the company for a price
of Rs 112.80 per share and hike its stakeholding in Maytas to 57.1%.
IL&FS already holds 37.1% stake in Maytas Infra as the Rajus had
pledged the stake with the infrastructure financing firm to raise funds
in October 2007 soon after the company was listed. htttp://www.maaproperties.com
PROPERTY
firms are launching new housing projects and raising pitch for their
ongoing projects hoping to make decent sales going into the festive
season. The mood among builders may be buoyant but few believe price
hike is possible as demand is still hesitant and new supplies are
hitting the market. The festive season, which usually begins late
September with Hindu festival of Navratri and continues up to Christmas
holidays, often sees higher sales of property, cars and other durables
in India. “Last year’s festive season was a total washout. But this
time indications are that we are back to normal,” said Mumbai-based
Lodha Developers director Abhisheck Lodha. He said property firms
usually make 30% of their sales in one and a half month between
Navratri and Diwali, and this time will be no different. Last festive
season, though, was disastrous. Lehman had just collapsed plunging the
entire global economy in a crisis and driving away homebuyers fearing
for their jobs.
Mr Lodha is planning to launch two new
real estate projects, comprising apartments priced over Rs 1 crore, in Mumbai’s
suburbs of Andheri and Thane. So far, the slow return of housing demand
was scripted by lower-priced homes. But Lodha’s offerings indicate the
builder is confident of getting buyers to high-priced segment as well.
Similarly in Delhi, DLF is preparing to launch over 1500 apartments in
a project in which it sold 1350 apartments just six months ago. DLF
says it is yet to fix a price or number of apartment to be sold for the
project, but brokers on behalf of DLF are offering apartments at a 30%
premium to the first phase price. “If a location has a very good demand
and not enough supply, prices will go up,” says DLF executive director
Rajiv Talwar. Delhi may be one such market because it has lived under
state-controlled DDA’s monopoly for long and has not many private
developers building homes. But price rise is not something many are
really betting on. “Housing demand is not going to rise dramatically in
a hurry. The market remains price-sensitive and any attempt at price
hike will adversely impact demand,” says Vipin Aggarwal, principal of
$200-million India Industrial Growth Fund. Agrees Pradeep Jain,
chairman of Parsvnath Developers and head of the NCR chapter of
industry body CREDAI, “We have requested all developers not to increase
prices. If we increase prices in the next six months, it’s likely that
demand will be hurt and we may get into that vicious circle of lower
demand and higher debt.”
HIGH HOPES
While
some firms like DLF & Omaxe believe price rise is imminent, others
like Parsvnath have decided to keep prices steady to encourage demand
Last festive season was disastrous. Lehman collapsed plunging the
economy in a crisis and driving away homebuyers The festive season,
which usually begins late September with the Hindu festival of Navratra
and continues up to Christmas, often sees higher sales of property,
cars and other durables
Quinn Group,
a leading business conglomerate from Ireland, has unveiled Q-City, a
Class-A commercial building in Hyderabad, which sets a new benchmark in
quality commercial real estate. This is the first offering in India
from Quinn Property, the division of Quinn Group, specialising in
development and management of premium quality commercial real-estate
for lease. Q City Hyderabad, a signature property located at
Gachibowli, in the midst of marquee organizations like Microsoft,
Infosys, Wipro, Computer Associates, UBS, Franklin Templeton, Polaris,
ICICI amongst others. Q-city is a modern international office
development consisting of two blocks with a total built-up area of 1.2
million sq.ft. Speaking to mediapersons here today on the launch of
their first project, Peter Quinn, Head-Quinn property said, "India is
an exciting market for us with immense potential in the commercial
real-estate space. The location where Quinn developed its first project
is one of the most prominent ones in the South Asian region with the
presence of many marquee organizations and with many more planning to
set-up operations".
