Sherwoods Independent Property Consultants is to open an office in New Delhi this summer as investor appetite grows amid a shortfall of four million residential units in the Indian capital. The Dubai-based real estate adviser, which has three offices in UAE as well as a strong presence in Europe, predicted on Tuesday New Delhi will have a buoyant housing market with rising demand among the burgeoning middle class as India’s economy booms. Sherwoods estimated that there is a supply shortage of around four million homes in the capital. Puniet Singh, CEO of Sherwoods Independent Property Consultants (India) Private Limited said: “Sherwoods is targeting all metropolitan cities in India, including New Delhi, Mumbai, Kolkata, Chennai and Bangalore as well as tier-2, urbanised cities such as Hyderabad, Pune, Chandigarh, Gurgaon and Noida.”
As well as showing signs of recovery from the global crisis, interest rates in India have from fallen from 11.5 percent to 9.25 percent, making mortgages cheaper. The Indian economy is likely to grow at 6.6 percent in the current fiscal year on the back of new investment proposals, economic think-tank Centre for Monitoring Indian Economy (CMIE) said in a report on Tuesday. “We believe this is a highly favourable time for real estate investments as India is now showing strong signs of recovery and opening excellent opportunities in the mid to long-term horizon,” Singh continued. “India’s resiliency is of particularly strategic importance because growth has levelled out in other major global markets, putting India in the spotlight as a new prime destination for real estate investors.”
Tuesday, May 19, 2009
Right Time to Buy house, don't rent - message from the housing sector
The economic slowdown has hit home sales and sent prices plummeting. The flip side: home rents have shot up.
Rents went up by around 30 per cent in major cities, including Delhi and the national capital region (NCR) last year, as more and more consumers, hit by the slowdown, preferred living in rented houses to investing huge sums to buy properties, industry officials said. "The slowdown has fuelled the rental market. On an average, the residential rental has gone up 30 per cent in the last one year in Delhi and NCR. In many areas, it went up even 50 per cent," Rajesh Goenka, chairman of Axiom Estates, the London-headquartered provider of property services in India, told reporters. Added Pradeep Khanna, chairman of Khanna Properties, a west Delhi-based brokerage firm: "The rental for a normal two-bedroom set in Delhi and NCR was about Rs.7,000 per month one year back. However, today it is very difficult to get a decent two-room set on the same rent even in remote localities." According to industry officials, the high cost of properties and slackening supply of houses have fuelled rentals in Delhi. "People need a house to live in, and not everyone can buy one. With prices still beyond the reach of a large section of the middle class, staying in rented accommodation is the only option left," Goenka said. "Even the potential buyers are on a wait-and-watch mode now." Priyanka Prasad, a jewellery designer, echoed similar views, saying she had to shift home from north Delhi to west Delhi because of high rents. "I was paying Rs.7,500 for a two-room set in the Kamla Nagar area in north Delhi. However, this year the landlord asked for Rs.12,500. This was out of my budget, so I shifted to Dwarka, where I got a similar house for Rs.8,500," Prasad said. The trend in the housing rental sector is just opposite to the commercial and official rental markets, where prices fell 30 per cent last year, according to reports by global real estate consultant Cushman and Wakefield. Sameer Nayar, managing director and Asia Pacific head of the real estate unit of Credit Suisse, said supply was more than the actual demand in the office rental sector. "Office rentals are going down because the supply is more than the actual demand. However, in the residential property sector, the demand is much higher. Naturally, the rent will go up," Nayar said.
Rents went up by around 30 per cent in major cities, including Delhi and the national capital region (NCR) last year, as more and more consumers, hit by the slowdown, preferred living in rented houses to investing huge sums to buy properties, industry officials said. "The slowdown has fuelled the rental market. On an average, the residential rental has gone up 30 per cent in the last one year in Delhi and NCR. In many areas, it went up even 50 per cent," Rajesh Goenka, chairman of Axiom Estates, the London-headquartered provider of property services in India, told reporters. Added Pradeep Khanna, chairman of Khanna Properties, a west Delhi-based brokerage firm: "The rental for a normal two-bedroom set in Delhi and NCR was about Rs.7,000 per month one year back. However, today it is very difficult to get a decent two-room set on the same rent even in remote localities." According to industry officials, the high cost of properties and slackening supply of houses have fuelled rentals in Delhi. "People need a house to live in, and not everyone can buy one. With prices still beyond the reach of a large section of the middle class, staying in rented accommodation is the only option left," Goenka said. "Even the potential buyers are on a wait-and-watch mode now." Priyanka Prasad, a jewellery designer, echoed similar views, saying she had to shift home from north Delhi to west Delhi because of high rents. "I was paying Rs.7,500 for a two-room set in the Kamla Nagar area in north Delhi. However, this year the landlord asked for Rs.12,500. This was out of my budget, so I shifted to Dwarka, where I got a similar house for Rs.8,500," Prasad said. The trend in the housing rental sector is just opposite to the commercial and official rental markets, where prices fell 30 per cent last year, according to reports by global real estate consultant Cushman and Wakefield. Sameer Nayar, managing director and Asia Pacific head of the real estate unit of Credit Suisse, said supply was more than the actual demand in the office rental sector. "Office rentals are going down because the supply is more than the actual demand. However, in the residential property sector, the demand is much higher. Naturally, the rent will go up," Nayar said.
Great News Demand OIf Real Estate on Rise Demand begins showing up in India again, say real estate firms
There is a surge in buying interest in all-inclusive ‘affordable’ flats being built for mid-income budgets
The BSE Realty Index surged the most on Monday as the Bombay Stock Exchange Sensex hit the upper circuit for the first time. The 14-stock index closed 23 per cent higher at 2,968.75, rising around 37 per cent over the last month.However, it is still around 63 per cent lower from last year (April 16, 2008). On Monday, the broader market index, Sensex, closed 17.34 per cent higher at 14,284.24 points. Analysts and firm officials are upbeat about the revival of the realty sector. They say if fundamentals such as credit market situation, interest rates and housing demand improve further, there can be a faster revival.“The real estate sector will see a revival faster than what was envisaged earlier. But the rise in stock prices, too, has been swift. The sector always lags behind the stock market in terms of time lines,” said Ambareesh Baliga, vice-president and research head at Karvy Stock Broking.“We can expect a revival in the real estate sector now because a lot of policy directives, including approval of external commercial borrowings, special economic zone status, FDI (foreign direct investment) in real estate, lower interest rates and overall availability of credit to the real estate sector, may happen,” said Amitabh Chakraborty, research head, Religare Securities.Real estate officials that Financial Chronicle spoke to are confident that the worst is behind them and that they are hoping to see better days ahead. “The market is likely to see fresh liquidity infused in the system after a prolonged downward swirl. The real estate index performance on Monday also suggests that the suitable time to make real estate purchase has arrived,” said Rajesh Vardhan, managing director, Vardhman Group.Rajeev Talwar, executive director, DLF, said a stable government is good for the revival of the real estate sector. “There is urgent requirement for urban housing reforms. There is humungous requirement for housing for people. Rules and regulations should not put more constraints on fresh supply hitting the market,” said Talwar. However, some analysts say Monday’s performance may not be sustainable in the long-term because the fundamentals of the real estate firms and the economy have not changed much.“Lot of shorts have built up in these companies and they are still not covered. Even their futures are trading at a discount. Hence, I think the companies are not going to have any immediate benefit (out of this market rally),” said Priyadarshi Srivastava, head of sales, IDBI Capital.
The BSE Realty Index surged the most on Monday as the Bombay Stock Exchange Sensex hit the upper circuit for the first time. The 14-stock index closed 23 per cent higher at 2,968.75, rising around 37 per cent over the last month.However, it is still around 63 per cent lower from last year (April 16, 2008). On Monday, the broader market index, Sensex, closed 17.34 per cent higher at 14,284.24 points. Analysts and firm officials are upbeat about the revival of the realty sector. They say if fundamentals such as credit market situation, interest rates and housing demand improve further, there can be a faster revival.“The real estate sector will see a revival faster than what was envisaged earlier. But the rise in stock prices, too, has been swift. The sector always lags behind the stock market in terms of time lines,” said Ambareesh Baliga, vice-president and research head at Karvy Stock Broking.“We can expect a revival in the real estate sector now because a lot of policy directives, including approval of external commercial borrowings, special economic zone status, FDI (foreign direct investment) in real estate, lower interest rates and overall availability of credit to the real estate sector, may happen,” said Amitabh Chakraborty, research head, Religare Securities.Real estate officials that Financial Chronicle spoke to are confident that the worst is behind them and that they are hoping to see better days ahead. “The market is likely to see fresh liquidity infused in the system after a prolonged downward swirl. The real estate index performance on Monday also suggests that the suitable time to make real estate purchase has arrived,” said Rajesh Vardhan, managing director, Vardhman Group.Rajeev Talwar, executive director, DLF, said a stable government is good for the revival of the real estate sector. “There is urgent requirement for urban housing reforms. There is humungous requirement for housing for people. Rules and regulations should not put more constraints on fresh supply hitting the market,” said Talwar. However, some analysts say Monday’s performance may not be sustainable in the long-term because the fundamentals of the real estate firms and the economy have not changed much.“Lot of shorts have built up in these companies and they are still not covered. Even their futures are trading at a discount. Hence, I think the companies are not going to have any immediate benefit (out of this market rally),” said Priyadarshi Srivastava, head of sales, IDBI Capital.
Jai Ho Congress Return OF UPA ALso Boosts Real Estate Sector
UPA’s return to power, that too with near total majority, has brought smiles on the faces of people associated with real estate and industry sectors in the Tricity. They feel that the Congress-led government would now be in a position to take some radical decisions for revival of the economy, which would affect both real estate and industry sectors. As slowdown has affected industry and real estate business in Chandigarh, Panchkula and Mohali, now people associated with these two sectors are expecting revival of economy in the next few months. As UPA allies like Rashtriya Janta Dal, Lok Janshakti Party and Samajwadi Party have been marginalized this time, industrialists and real estate developers feel this would give a free hand to Congress-led UPA to take some radical decisions including foreign investment for the revival of economy. MPS Chawla, president, Chandigarh Industries Association, said that stable government in the Centre would improve the economy. He said that as government would not have any undue pressure, economy would witness upward trend in the next few months. To revive the economy, government should announce special package for the small scale industries and trade sector, he said, adding that currently industries and real estate sectors are worst affected, which needs immediate relief. He demanded that government should slash interest rates. Vishnu Goyal, general secretary, Haryana Chamber of Commerce and Industries, said that a majority government is a good sign for the economy as political stability would ensure faster revival of the economy. He said there are around 400 small scale industries in Panchkula which needs immediate relief package as slowdown has affected them. Real estate sector in Mohali is already witnessing slump due to slowdown as construction of houses is more than their demand. To attract buyers, developers have already announced various sops including discount between 40 to 50% in a hope to revive the ailing real estate market. Vijay Arora, president, Peermuchhalla Builders Association, said that they expect UPA government to announce real estate policy which would revive the market. He said that the market is in a bad shape due to recession and higher rate of loans. Stable government in the Centre would bring stability to the economy, he added
Indiabulls Real Estate latest developer to tap QIP route
The real estate arm of the Indiabulls group of companies has announced plans to raise money through a share sale, becoming the third real estate developer to raise money through this route in recent weeks.
Equity issue: An Indiabulls office in Mumbai. The company has informed BSE that its shareholders have approved the stock sale. Prashanth Vishwanathan / BloombergWhile the company didn’t specify what the funds would be used for, an analyst said it could be for its power business.
Indiabulls Real Estate Ltd, India’s fourth largest real estate developer by market value, plans to raise up to $600 million (around Rs2,900 crore) through a qualified institutional placement (QIP), the company said in a statement to the Bombay Stock Exchange (BSE) on Monday. The QIP, or sale of shares to investors such as banks and financial institutions, opened on Monday.
Indiabulls told BSE that the company’s shareholders have approved the QIP issue. The company didn’t disclose details of the number of shares it plans to sell or the price at which it would do so.
Morgan Stanley is lead manager to the issue. The allotment of the shares will be made around Friday, according to the draft prospectus submitted by the company, and which can be seen on the National Stock Exchange’s website.
This is the third instance of a real estate company raising funds through an equity issue in recent times.
On 16 April, Unitech Ltd, India’s second largest developer by market value, managed to raise as much as $325 million in a QIP to repay debt and fund projects.
Last week, DLF Ltd, India’s largest developer by market value, said its promoters had sold a 9.9% stake in the company for Rs3,860 crore, to raise money to buy out hedge fund DE Shaw and Co. LP’s investment in DLF Assets Ltd, also promoted by them, and to infuse fresh capital into this company.
“I think more such issues are likely,” Vedika Bhandarkar, managing director and head of investment banking, JPMorgan, had said at the time of DLF’s share sale. “When the volatility was very high, investors were unwilling to put their money to work. Now, that has changed. They are willing to put money if they understand it is good for the company. Investors are focused on large stocks.”
An analyst said Indiabulls would use the proceeds of the QIP to fund its power projects in Maharashtra and Chhattisgarh.
Indiabulls Real Estate has a 71% stake in the group’s power business.
“The company, according to is draft prospectus, has only around Rs1,000 crore of debt. So it does not look likely that it is raising funds to repay debt like most real estate developers are doing,” an analyst with a domestic brokerage firm who did not want to be identified said. “I think even this debt was taken for their power business and not their real estate business.”
Indiabulls’ officials were not available for comment on Monday.
Indiabulls plans to develop power plants in Amravati and Nashik in Maharashtra and Bhaiyathan in Chhattisgarh.
In February 2008, Indiabulls Power Services raised Rs1,600 crore from steel czar L.N. Mittal and hedge fund Farallon Capital Management, through the sale of a 37.5% stake.
Shares of Indiabulls Real Estate soared 38.51% to close at Rs205 per share on the Bombay Stock Exchange, in the few seconds for which trading was allowed on Monday before being suspended for the day because the exchange’s benchmark index breached the upper circuit level.
The Sensex ended the day 17.34% up and the BSE Realty Index, up 23.45%.
Equity issue: An Indiabulls office in Mumbai. The company has informed BSE that its shareholders have approved the stock sale. Prashanth Vishwanathan / BloombergWhile the company didn’t specify what the funds would be used for, an analyst said it could be for its power business.
Indiabulls Real Estate Ltd, India’s fourth largest real estate developer by market value, plans to raise up to $600 million (around Rs2,900 crore) through a qualified institutional placement (QIP), the company said in a statement to the Bombay Stock Exchange (BSE) on Monday. The QIP, or sale of shares to investors such as banks and financial institutions, opened on Monday.
Indiabulls told BSE that the company’s shareholders have approved the QIP issue. The company didn’t disclose details of the number of shares it plans to sell or the price at which it would do so.
Morgan Stanley is lead manager to the issue. The allotment of the shares will be made around Friday, according to the draft prospectus submitted by the company, and which can be seen on the National Stock Exchange’s website.
This is the third instance of a real estate company raising funds through an equity issue in recent times.
On 16 April, Unitech Ltd, India’s second largest developer by market value, managed to raise as much as $325 million in a QIP to repay debt and fund projects.
Last week, DLF Ltd, India’s largest developer by market value, said its promoters had sold a 9.9% stake in the company for Rs3,860 crore, to raise money to buy out hedge fund DE Shaw and Co. LP’s investment in DLF Assets Ltd, also promoted by them, and to infuse fresh capital into this company.
“I think more such issues are likely,” Vedika Bhandarkar, managing director and head of investment banking, JPMorgan, had said at the time of DLF’s share sale. “When the volatility was very high, investors were unwilling to put their money to work. Now, that has changed. They are willing to put money if they understand it is good for the company. Investors are focused on large stocks.”
An analyst said Indiabulls would use the proceeds of the QIP to fund its power projects in Maharashtra and Chhattisgarh.
Indiabulls Real Estate has a 71% stake in the group’s power business.
“The company, according to is draft prospectus, has only around Rs1,000 crore of debt. So it does not look likely that it is raising funds to repay debt like most real estate developers are doing,” an analyst with a domestic brokerage firm who did not want to be identified said. “I think even this debt was taken for their power business and not their real estate business.”
Indiabulls’ officials were not available for comment on Monday.
Indiabulls plans to develop power plants in Amravati and Nashik in Maharashtra and Bhaiyathan in Chhattisgarh.
In February 2008, Indiabulls Power Services raised Rs1,600 crore from steel czar L.N. Mittal and hedge fund Farallon Capital Management, through the sale of a 37.5% stake.
Shares of Indiabulls Real Estate soared 38.51% to close at Rs205 per share on the Bombay Stock Exchange, in the few seconds for which trading was allowed on Monday before being suspended for the day because the exchange’s benchmark index breached the upper circuit level.
The Sensex ended the day 17.34% up and the BSE Realty Index, up 23.45%.
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