Real Estate News No 4

Real Estate Sector News 24th April’2012

1.Despite incentives, barely 8% cessed buildings redeveloped.

Merely eight per cent of the 16,000-odd cessed buildings in Mumbai have been redeveloped since 1999, when the state government decided to offer incentives to private developers in return for rehabilitating tenants of such properties free of cost. The Mumbai Transformation Support Unit (MTSU), which has arrived at these figures as part of its year-long cessed buildings mapping exercise, has in its final report suggested that the government should axe the politically populist policy of free housing for tenants of cessed buildings. These are pre-1969 tenanted properties in the island city that pay a minimal repair cess to MHADA. The findings show that the policy has not benefited the four lakh families living in these buildings.

2.Compensate landowners, else erring official to pay Rs 1 lakh: HC to Punjab.

Taking serious note of the inordinate delay being caused in payment of compensation to landowners in Punjab, the Punjab and Haryana High Court has told the state government to ensure that no further delay is caused in this regard. If the state fails to do so, a division bench has held, then the erring official will have to pay a penalty of Rs 1 lakh in each such case which reaches the High Court. The High Court has also passed strictures against Punjab for causing “unnecessary delay”.

3.RBI rate cut likely to perk up property scene in Tricity.

The Reserve Bank of India’s move to cut key rates for the first time in three years by a sharp 50 basis points may kickstart property transactions in Tricity, which have seen a major slowdown over the past year. The correction in residential property prices in Chandigarh, Mohali and Panchkula has ranged from 15 to 25 per cent during this period. Property dealers prefer to call it a “stable market” — when prices of marlas and kanals have not been going through the roof.

4.Looking for a career in Real Estate?

Is the Indian real estate sector the right place to make a serious career in now? Compared to more developed countries, the Indian real estate sector still lacks sophistication and transparency. However, it continues to be in the limelight of domestic and international investments. This has naturally brought on the need for better, more capable human resources.

5.Realty players to protest decision deficit, clearance delays.

Mumbai's realty sector has taken a decision to protest decision deficit and policy paralysis in the state and central governments and various agencies. A large number of realty organisations, including Maharashtra Chamber of Housing Industry (MCHI) and Confederation of Real Estate Developers' Association of India (Credai), have joined hands to go on a token strike and sit-in dharna on May 3 to protest the lack of continuity in policies and inordinate delays in getting clearances for various projects.

6.DLF falls after exclusion from BSE Sensex.

Shares in India's biggest real estate developer DLF fell as much as 2.5 percent after the Bombay Stock Exchange (BSE) said it will replace the company in India's benchmark 30-share Index with pharma major Dr Reddy's Laboratories. DLF has taken a beating from investors with the company's market value eroding almost 84 percent to $6.4 billion compared with the peak of over 2 trillion rupees ($38.4 billion) in early 2008.

7.Tata Housing announces winners of its project

Arvind and Smart Value Homes LLP, a special purpose vehicle (SPV) created by Arvind Real Estate and Smart Value Homes Ltd, a 100 per cent subsidiary of Tata Housing Development Company Ltd, announced the list of the beneficiaries of their affordable housing project near Ahmedabad on Monday. The JV, which is developing the mega integrated sustainable green township, spread across 135 acres, declared the 950 winners of the first phase of “Shubh Griha” project through a lucky draw. Since the commencement of booking in February, the project was subscribed by over 9 times and received over 4 times dully filled application forms across India for 950 apartments, priced between Rs 7, 92,300 and Rs 12, 33,100, according to a company statement here.

8.Before you shop for home loan, check these.

Living in your own home is the dream of every household and interest rate is an important consideration in home buying decision. The Reserve Bank of India cut the rates for the first time in three years which has led the banks to announce a reduction in their lending rates. While you may be thinking to go ahead with your decision you deferred for a while, consider the following points to make the most out of your home purchase.

9.After govt clarification, NMC starts clearing hsg projects post-clarification

The town planning department of the Nashik Municipal Corporation has started clearing pending residential building plans after the state clarified on 20% reservation for economically weaker sections in housing projects over 2,000 sq mt in size.

10.Realtors add designer touch to luxury living.

Designers are lending their names to residential projects by adding bespoke features. Like fashion brands, individual designers are endorsing projects that reflect the progressive lifestyle of a discerning few who are willing to shell out a premium for all things superior. Legendary rock star Mick Jagger’s daughter Jade Jagger is adding her design flair to 70 apartments in Equinox Realty’s 400-unit residential project in Hebbal in Bangalore. These apartments of 4,000-6,000 sq ft are priced between Rs 5 crore and Rs 10 crore.

Real Estate News No 3

Real Estate Sector News 18th April’2012

1.MC keen to develop residential complex at Manimajra.

The Municipal Corporation (MC) is contemplating the development of a residential complex at Manimajra. For the purpose, an area measuring around 6 acres would be provided with basic civic amenities. Thereafter, a decision would be taken on whether plots are to be auctioned or a group housing project started. The area to be developed - called Pocket 6 - is behind the showrooms at the NAC market near the Housing Board light point.

2.Rate cut impact: Home sales may finally move up.

Home sales, on a declining path for many quarters in key markets such as the National Capital Region (NCR) and Mumbai, are expected to get a boost after the central bank cut repo rates by 50 basis points. However, property prices are unlikely to move down, say property companies and consultants.

3.Lack of civic sense, maintenance have stained Connaught Place facades.

The white-washed facades in Connaught Place have already lost their sheen a year-and-a-half after the restoration work was carried out in the area. The paan-stained facades have turned black and are also chipping-off in some areas. According to NDMC officials, the company carrying out the work there, EIL, “is responsible for maintenance of this area for five years”.

4.From heaven to living hell: Traders, residents lament CP’s fall from glory.

Eighty-year-old B G Khullar stands near H-block in Connaught Place waiting for someone to help him get to the Middle Circle where he lives. At his age, walking in itself is an effort. But now, he has to navigate through uneven roads and dug-up pathways to reach home after completing his daily chores.

5.Adarsh land belongs to state not Army: Judicial Commission.

In a big relief for Maharashtra government, the judicial commission probing the Adarsh housing scam has said the land on which the controversial skyscraper stands belongs to the state and not the Ministry of Defence (MoD) and that it was not reserved for Kargil war widows. The interim report of the two-member panel headed by former High Court Judge J A Patil, which was tabled in the state assembly today by Chief Minister Prithviraj Chavan, has said MoD has failed to prove its ownership of the land.

6.Lack of transparency in selection of Lavasa project: CAG.

Observing that the project nods were given without environmental and Cabinet approvals, the Comptroller & Auditor General (CAG) has rapped the Maharashtra government for "total lack of transparency" in the selection of the Lavasa hill station project in Pune district. "We have brought out total lack of transparency in selection of the project proponent. Granting of SPA( special planning authority) status to Lavasa Corporation Limited (LCL) without any control by the Government left scope for irregularities, perceived conflict of interest and violation of environmental laws," it said.

7.Realty industry welcomes RBI rate cut, sees benefit for all.

The interest rate sensitive realty industry on Tuesday welcomed the Reserve Bank of India's (RBI) decision to cut key lending rates by 50 basis points, and felt the move will boost builders' and home loan customers' sentiments alike. "For the real estate in particular, this is indeed a welcome step by RBI. While the sector was already reeling under the pressures of high interest rates, this will allow banks to lower down the interest rates significantly. Both buyers and developers shall get benefitted from this," said Pradeep Jain, chairman, Confederation of Real Estate Developers' Association of India ( CREDAI).

8.RBI`s rate cut to benefit realty companies: Knight Frank.

The 50 bps reduction announced by the RBI will give a huge sentimental boost to the real estate sector in general and the housing loan segment in particular. Though this rate cut does not affect the fundamentals of the RE market. We have seen a steady off-take in housing loans despite the high interest rates and real estate prices. This cut will only give it an extra fillip. However the larger impetus will come from the other measures. At present, UCBs are permitted to assume aggregate exposure on real estate, commercial real estate and housing loans up to a maximum of 10% of their total assets with an additional limit of 5% of their total assets for housing loans up to Rs 1.5 million.

9.Builders hail rate cut, hope it will be passed on.

Mr Paras Gundecha, President, Maharashtra Chamber of Housing Industry, said commercial banks should cut interest rates so that home loans become affordable. High cost of funding is one of the main causes of rising real estate prices, he said. He also welcomed the RBI decision to scrap pre-closure of loans. It is a welcome development for a stagnating economy as this is expected to spark off fresh investments.

10.Hypercity to be cautious on store expansion plans.

Hypercity, the hypermarket arm of retailer Shoppers Stop , is scaling down its store rollouts and tweaking the product mix to include high-margin goods in an effort to achieve break even faster. 'We would like to have a medium-sized business but it has to be a profitable business. Our idea is not to build huge scale,' Mark Ashman, chief executive of Hypercity, told Reuters. Hypercity contributes 30 percent to the overall consolidated revenue of Shoppers Stop. Most organised food and grocery retailers in India are yet to turn profitable as they operate with high costs and compete on razor-thin margins.

11. CREDAI lauds rate cuts, hopes more ahead

The Confederation of Real Estate Developers Association of India (CREDAI) has termed the credit rate cut announced by the Reserve Bank of India (RBI) on Tuesday as the right policy step saying the real-estate body hopes to see further rate cuts. Lalit Jain, National President, CREDAI said, “While credit rate cuts are a step in the right direction, we are looking forward to more rate cuts. Expecting home loan rates to come down now based on the Repo and Reverse Repo rate cuts, the industry is waiting to see the outcome of the annual policy statement.”

12.ICICI Bank, Indiabulls Arms Bid 600 Cr for Parsvnath Plot.

ICICI Bank’s domestic real estate fund and Indiabulls Real Estate have bid between . 500 crore and . 600 crore for developer Parsvnath’s 1.2-acre plot at Kasturba Gandhi Marg in New Delhi. Sahara, Bhushan Steel and Red Fort Capital had also bid for the centrally-located property earlier.

13.Prepayment Penalty on Home Loans Goes.

Home loan customers will have greater flexibility to switch to banks that offer better rates with the banking regulator having banned lenders from charging a prepayment penalty on floating rate home loans. For over a year, Reserve Bank of India (RBI) persuaded banks to desist from charging a prepayment fee but moral suasion from the central bank was to no avail. On Tuesday, RBI barred banks from charging any fee from a customer who wants to repay an outstanding loan and close the account.

Real Estate News No 2

Real Estate Sector News 16th April’2012

1.Mumbai rentals to be dearer.

In a move that would impact existing tenants and migrants moving into Maharashtra, the state government has proposed a hike in stamp duty on Leave and Licence Agreements (LLAs). The state’s move, if implemented, could potentially increase the cost of renting a property in Mumbai, Pune and the tier-II cities and may end up as a good example for other states on what not to do.

2.Equinox Realty to invest Rs 600cr on housing project in B'lore.

Essar Group real estate company Equinox Realty will invest about Rs 600 crore on construction of its first housing project in Bangalore. The company, which forayed into the realty sector in 2007, has appointed construction major L&T to build its housing project 'Water's Edge' spread over 8 acres of land.

3.Real estate mutual funds yet to take off.

In spite of permission from the regulator, no fund house has come forward to launch a real estate fund. Mutual fund houses in the country have so far not evinced interest in launching real estate mutual funds though regulations have been in place since 2008 by the Securities and Exchange Board of India.

4.Escrow services for real estate transactions still to gain popularity.

In an industry where every year $2.5 billion, or about 13,000 crore, worth of institutional real estate transactions are completed, the value of disputed transactions alone since 2006 adds up to $3 billion, says real estate consultant Knight Frank. Typically, the stakes in such realty deals, which also include foreign private equity money and large institutions, are so high that both parties - the buyer and the seller - cannot afford for transactions to stall due to last minute hitches. Hence, the need for escrow services.

5.I don't want to bite more than I can chew: Darshan Hiranandani.

Darshan Hiranandani, 30, managing director of the Hiranandani Group of companies and son of patriarch Niranjan,spearheaded the realty group’s foray into Dubai and, more recently, its entry into the power sector. There’s also a dispute between his father and him on one side and his sister, Priya Vandrevala, over control of some of the family’s projects in the country.

6.Sahara, ICICI, Bhushan Steel in fray to buy Parsvnath's Connaught Place land.

Sahara Group, ICICI Bank, Bhushan Steel, Bharti Realty, Red Fort Capital and Shri Lal Mahal are understood to be in the race among others to acquire Parsvnath Developers' 1.18 acre of prime commercial land near Connaught Place in the National Capital. In January, Parsvnath had announced plans to monetise the KG Marg land, which it had bought for Rs 200 crore in 2008.

7.Hotel Leela Venture: Huge land bank could help retire debt.

Reports about the Rs 3,000-crore debt restructuring proposal of Hotel Leela Venture hitting a wall highlights the contrasting fortunes of one of the premium hospitality fir-ms in the industry and its pee-rs such as Indian Hotels Company and East India Hotels. A key problem the company has been grappling with for a long time is its high debt. On a consolidated level, it had a debt of 3,800 crore at the end of FY11. For the six-month period ended September, 2011, considering the stand-alone level of operations, debt rose to Rs 4,295 crore. Also during the period, the debt-to-equity ratio, on a standalone basis, was 2.15, against 0.72 for Indian Hotels Company and 0.15 for EIH.

8.Intelligence platform to launch vertical.

For just Rs 10,000, you can get details of a real estate project — including information the developer won't share with you. Real estate intelligence platform PropEquity has said it will shortly be launching a B2C vertical to cater exclusively to consumers who want to invest in the real estate sector.

9.A city in transition ,PUNE REDISCOVERED.

Pune is not the place it once was. Over the years, it has welcomed change with open arms. However, the city has retained its old-world charm and the quaint characteristics of the Maratha days, making every Punekar proud. Sudarshan Purohit captures the essence of the diverse city. Pune, Queen of the Deccan. Years ago, the British would retire from the heat and dust of Bombay to the pleasant climes of this small town amidst the Sahyadris. They set up their army cantonment to the north-east of the old town in 1817, renamed the place ‘Poona’, invented a game that was initially called Poona (and later renamed Badminton), set up a rail link between Bombay and Poona so they could get there faster, and probably thought they’d finally ‘civilised’ it.

Real Estate News No 1

Real Estate Sector News 13th April’2012

1. Loopholes plague housing bill
The Real Estate Regulatory Authority Bill, which was introduced in the legislative assembly today, has several loopholes that need to be ironed out. However, these lacunae can be amended in ongoing assembly session before it is passed. Ramesh Prabhu, chairman of the Maharashtra Societies’ Welfare Association, said, “It is neither in favour of buyers or developers. It has several lacunae that need attention.”


2.‘Housing Bill will aid corrupt practices'
The Maharashtra Housing Regulatory Bill could bring in ‘corrupt' practices and ‘unnecessary' interference in real estate business, said Mr Lalit Kumar Jain, National President, Confederation of Real Estate Developers' Associations of India (CREDAI). The Maharashtra Government presented the Bill in the Assembly on Wednesday.


3.Builders blame sluggish market for overshooting deadlines
Confirming that many projects were late by six months to over three years, managing director Pankaj Kapoor of Liases Foras, a real-estate research firm, said 65% of the 4,091 projects launched over the last three years have been deferred. Kapoor revealed that instead of spending the initial booking amount on the building’s construction, most builders use it to buy chunks of land.


4.DDA Likely to Raise FSI for Hotels , Body’s move would help many Delhi hotels add a number of rooms to their existing capacity.
The Delhi Development Authority (DDA) is considering a proposal to increase the floor space index for hotels in Delhi to three, which would help many hotels to add a number of rooms to their existing capacity. DDA had earlier increased the FSI for hotels in Delhi from 1.5 to 2.25 in 2008 to help add more rooms in anticipation of the rush of tourists for the Commonwealth Games.


5.Is the Property Market Headed for a Hard Landing?
The residential property market in India, particularly in the Tier I cities, has remained sluggish for the past 12 months, with significantly lower sale volumes when compared to the high absorption rates of 2010. Home loan interest rates now seem to be at their cyclical highs (but should soon decline) and unforeseen tax levies have come at a time when the industry is facing its moment of reckoning.


6.Who cares for water harvesting?
Who is to be blamed for water scarcity during summer months? Are the developers making necessary arrangements for rainwater harvesting? These are very important questions and deserve serious answers. The sweltering summer is back and, now, one can feel the heat, quite literally. Also, it is a truism that people in big cities and metros suffer due to water scarcity. All this, when it has been drilled into our collective consciousness that we can fight water shortage if necessary arrangements for rainwater harvesting are in place.


7.Yamuna Expressway to open this month
Yamuna Expressway, the rapid-transit corridor between Delhi and Agra, will become operational this month. ET Realty writes how this project will transform the region into a hyper-growth zone. Yamuna Expressway, the rapidtransit corridor between Delhi and Agra, will be operational soon, as the new government in Uttar Pradesh has shown it the green flag. It was originally scheduled to be operational by December 2011.


8.70% of buildings in east Delhi quake-prone
An estimated 70% of buildings in east Delhi are prone to damage in an earthquake, lieutenant governor Tejendra Khanna said on Thursday. “The buildings should be identified and retrofitted on a priority basis. Buildings where retrofitting is not possible should be rebuilt,” Khanna said at a seminar on reducing earthquake risks.


9.5-star hotels on Expressway
The success of Formula 1 event, held for the first time in India in Greater Noida, has brought attention to Noida-Greater Noida Expressway, which is set to gain a chain of top-end hotels. Recently, Starwood, a US-based hotel chain, which was looking for a site for its ultra-luxury brand, St Regis, has ended its search in Noida. If things go according to plan, Noida-Greater Noida Expressway will see St Regis property with 200 rooms by 2015. The hotel is also planning to set shop in Mumbai and Goa. There are 27 St Regis Hotels around the world.