Affordable housing to play a key role in 2010, says CREDAI

Affordable housing to play a key role in 2010, says CREDAI




Affordable housing segment is set to play a key role in India's real estate sector in 2010 on the back of a significant pick up in
demand, a top industry body has said.

"Affordable housing will be a key factor in driving the sector and we have already started working on progressive solutions in this area for effective and customized implementation of such projects," Confederation of Real Estate Developers' Associations of India (CREDAI) Chairman Kumar Gera said.

An upturn in the economy and the Government's ongoing efforts to push growth in the infrastructure are expected to help the sector regain the growth trajectory, CREDAI said.

"This year will be crucial for the housing industry given the Government's concern over the massive housing needs of the people, especially in urban areas," Gera said.

Noting that the economic recovery would help India's real estate sector to return to the 2007-08 level, Gera said 2010 is expected to be a positive year for the segment.

The revival is expected to be driven by infrastructure growth, which, in turn, can accelerate real estate activities both in the residential as well as commercial spaces, he said.

2010 to be a good year for realty, says Credai

Chennai: Confederation of Real Estate Developers’ Associations of India (CREDAI) is hopeful of a positive year for the India real estate industry in 2010 and the market is expected to return to the 2007-08 level. Given the right opportunity and supportive policies, the real estate sector too would prove effective in driving the country's GDP growth. Infrastructure development is an area which will play a vital role as increased connectivity in terms of roads, rail and communication will lead to development in real estate. Development of other asset classes like warehousing, logistics, tourism and hospitality would also boost real estate activity.

Kumar Gera, chairman, CREDAI, said: “This year would be crucial for the housing industry given the government's concern over the massive housing needs of the people, especially in the urban areas. Supportive policies to encourage and aid the housing requirements of all sections are expected to propel the development in the real estate and allied sectors as well. Affordable housing would be a key factor in driving the sector and CREDAI has already started working on progressive solutions in this area for effective and customised implementation as suited to the Indian situation through NATCON 2010. Also, focus on tier II and tier III cities besides metros will help widen market and generate demand.”

Overseas Indians hesitate to take the property plunge on home turf

Even with a vast wealth base, overseas Indians are reluctant to invest in real estate in India. Despite the government having relaxed its property ownership laws for Non Resident Indians (NRIs), on Day 1 of the Pravasi Bharatiya Divas, the NRIs had some horror stories to narrate about investing in property in India.

“I waited 20 years before investing in property in Delhi. I was worried that I would get cheated. Even after taking all the requisite precautions, I quickly discovered that the previous owner of my property had sold the same property to two people at the same time. I took the case to court, where there has been no resolution for the last eight years, during which time four different judges looked into the case,” said an NRI from Washington DC.

The lackadaisical approach adopted by Indian courts came in for a lot of criticism during a day-long session titled “Property Related Issues of NRIs/PIOs” held at Vigyan Bhawan on Thursday. “After the case was filed, I flew down on three different dates from Washington to attend the hearing, but each time the defendant excused himself from the hearing by offering different excuses through his lawyer. Each time the case was adjourned,” the NRI said.

While the Indian government has advised all NRIs not to give a “general power of attorney” for their property to anyone, even relatives, those attending the conference complained that the ground reality was in conflict with such advice.

“I invested in a property in South Extension and even for something as mundane as getting a power or a water connection, my representative was asked to produce a general power of attorney. The authorities refused to accept a special power of attorney,” V K Chadda, a Hong Kong resident, said.

A presentation on the subject made by Dr Justice A R Lakshmanan, a former judge of the Supreme Court, highlighted steps that may be taken to remedy the current situation.

Chief among them was the suggestion to set up fast-track courts to deal with such cases in a time-bound manner.

A Didar Singh, secretary, Ministry of Overseas Affairs, said the government was “attempting fast track resolutions,” of such cases. He also added, “You must realise that most Indians face the same problems as you do. It is not a problem unique to NRIs. We’re a developing country and all attempts are being made to rectify the system. Having said that, a tremendous amount of investment is being made in India and it is as safe a place as any to invest.”

Addressing the gathering, Vyalar Ravi, Minister of Overseas Indian Affairs said, “As the state government property laws differ from state to state, consultation meetings have been organised with all states and all major states have responded positively by establishing individual departments or cells to deal with the NRI issues.”

Despite the assurances, the NRIs left the session as wary as ever. “It is a little patronising of the government to ask us to take precautions while investing and to consult professionals. We do that anyway, and still end up being cheated. It is a problem that needs to be addressed,” one of the NRI’s attending the conference said.

Affordable real estate will drive growth in Indian property market in 2010, experts claim

Affordable property is set to play a key role in the residential real estate sector in India in 2010 on the back of a significant pickup in demand, according to the country’s developers association.
An upturn in the economy and the Government’s ongoing efforts to push growth in the infrastructure are expected to help the sector grow this year, said Kumar Gera, chairman of the Confederation of Real Estate Developers’ Associations of India (CREDAI).
‘This year will be crucial for the housing industry given the Government’s concern over the massive housing needs of the people, especially in urban areas,’ Gera explained.

‘By the end of 2010 we expect prices in the real estate sector to roll back to at least 90% of the level prevalent in 2007/08,’ he added. CREDAI estimates that values have fallen by 20 to 35% on average across different regions in the country since August 2008.

Real estate growth expectations are based on an assessment of GDP growth by CREDAI, the global revival, domestic sentiments and on the assumption that there would be no major unforeseen fluctuations in the economy or natural calamities this year, he explained.

The real estate market in India was most hit by the downturn between August and October of 2008 when the sales almost came to a standstill.
There were some early signs of recovery in March 2009 and since then prices have stabilised and sales went on to improve considerably by the end of the year, Gera also said.

The growth of the information technology sector in different markets such as Bangalore, Pune and Kolkata will help drive the growth of housing in the regions irrespective of the national IT scenario, he said. And US economic recovery would help stabilise the situation in the IT sector and activities in the Special Economic Zones (SEZs) in the country, he added.

Infrastructure is also set to aid the property market revival on a local basis. In Mumbai prices are already rising at the prospect of the city’s second airport coming up near Khargar. According to Gulam Zia, national director for research and advisory services at Knight Frank, the Navi Mumbai area is likely to grow faster than other location.

Opening may be some six to seven years away yet, he said, but it is already a factor along with a new trans-harbour link and extensions to the metro network.
Generally it is southern cities that will see growth, according to Zia, but places like Kolkata in the east are also expected to see substantial growth, led by the IT industry.
‘Other emerging locations include Mahesh Tala and Tara Tala. Many new townships are being constructed in Tara Tala, gradually transforming it from an industrial zone to a residential township. This will be a promising area in the future,’ Zia added.

Returning NRIs boost demand for residential property

An estimated 25 million NRIs living in 130 countries in remittance have remitted US$52 billion so far this year. In fact India topped the list of countries flow followed by China and Mexico, according to World Bank report on Migration and Development Brief.

Migrant remittance flow to developing countries will be around $317 billion this year. It was $338 billion in 2008, higher than the previous estimate of $328 billion. A substantial portion of the NRI/PIO investment was directed towards Indian real estate.

The impact of global slowdown, job losses and unviable job offers has necessitated a section of NRIs to return to Indian shores. Time was when Gulf NRIs were bristling with confidence on noticing certain Gulf countries like Dubai in the UAE, Qatar and Kuwait changing local land laws to permit expatriates to invest in local real estate.

While a few HNIs had invested, others could not afford the high cost of local real estate and felt that they were left out in the race. But times have changed now.

Biggest Indian-Canadian landlord eyes India's 'dream' market Assetventures

Canada's biggest Indian landlord Bob Dhillon, who started his company from the back of his car and now owns more than 6,000 rental properties across the country, is set to enter the Indian real estate market.

Dhillon, who has been invited by Prime Minister Stephen Harper to join him during his visit to India beginning Monday, is bullish on the Indian market.

"Despite the current slowdown, I am sure the Indian real estate sector will take off in a big way. We are ready to come here next year," says 43-year-old Dhillon whose Mainstreet Equity is the first Indian-owned company to be listed on the Toronto Stock Exchange.

Dhillon, who started selling homes at the age of 19 and became a millionaire at the young age of 21, says: "Today, India is a realtor's dream. It is the fastest growing real estate market in the world after (western) Canada.

Three things make India a dream destination for him, he says.

"One, 50 percent of India's population is below 25 and they will spur demand for housing. Two, a vast majority of Indians live in rural areas which are set to see a huge housing activity. Third, as prosperity increases, people's hunger for home ownership will also increase.

"These three things are any real estate man's dream," he says.

Dhillon, who was born in Japan and educated in India, keeps a close watch on the Indian real estate market and has made many presentations on it at various fora.

About his inclusion in the prime minister's delegation, he says: "Because the prime minister wants to focus on economic ties with India... He sees that Canada and India have a huge economic future.

"We have a new generation of Indian businessmen in Canada who will bridge these two great economies. We will bring financial and intellectual inputs into this relationship."

Dhillon says the visit of the Canadian prime minister could not have come at a better time as the worst of the economic slowdown seems to be over.

"We have two great like-minded prime ministers. Stephen Harper and Manmohan Singh are both economists and policy driven. The visit will definitely boost our business relationship," he says.

Interestingly, Dhillon's company has boomed even in these troubled economic times. In fact, he has smartly leveraged the current crisis to expand his company to take its fortunes to well over $1 billion.

Explaining it, he says: "We have flourished because of the type of real estate business we do. We own mid-segment apartments mostly in western Canada which was not that badly hit.

"Then we had a lot of cash flow which we used to buy back 40 per cent of shares. Further, we have taken advantage of low prices to buy more properties."

The Indian king of the Canadian real estate considers his upcoming 2,300-acre island in Belize (Central America) the jewel in his crown. He is developing it into a world-class tourist resort for Hollywood celebrities. The island amid pristine blue sea waters will have hotels, golf clubs, casinos, condominiums, high-end houses and other facilities.

The likes of Madonna and Leonardo DiCaprio will be its residents, says Dhillon whose family first emigrated to Hong Kong, then Liberia and finally Canada from Tallewal village near Barnala in Punjab.

Hospitality giant on land hunt for city address

Zuri Hotels & Resorts
a multinational conglomerate promoted by a consortium of investors from West Asia is scouting for
opportunities in Kolkata. The company is open to contract management opportunities as well as setting up its own hotel in the city. The Zuri Group is into real estate, floriculture and hospitality with resorts and hotels in Kenya, the UK and India.

"The Zuri group sees tremendous potential in Kolkata and rest of the east. We are keen to be present in the hospitality sector here at the earliest. We are in talks with a couple of hotels on a possible management contract and use of the Zuri brand. If something does not work out within six months, we will look at a 1.5-2 acre plot in Kolkata proper to set up a 140-170 room business hotel. The investment will be around Rs 200-225 crore," said Aditya Mata, general manager of the Zuri group's flagship property in Kumarakom, Kerala. The group owns two other hotels in Goa and one in Bangalore.

The team currently camping in Kolkata to negotiate with potential partners is looking for a property with large banqueting facility to tap the marriage market. "Since marriages in Kolkata are elaborate, we want to get into the business. It's a good money-spinner as well," said Mata.

Incidentally, the company was looking for land in New Town and Rajarhat but developed cold feet after the Vedic land scam. "Land has become a hot potato. The thing that happened in Rajarhat was an eye-opener. We are now looking for a property in the central business district," company spokesperson Priti Chand said.

Apart from Kolkata, the group is eyeing properties in Ahmedabad, Pune, Chennai, Nagpur, Visakhapatnam and Mysore. While three of the four hotels that the group has in India are resorts, the company is now looking at business hotels that have a shorter return on investment.

Meanwhile, city-based Gama Hospitality (GHPL) on Tuesday signed a master franchisee agreement with Global Franchise Architects (GFA) to launch four international brands Coffee World, Pizza Corner, The Cream & Fudge Factory and The Donut Baker in the eastern region. With an investment of Rs 52 crore, GHPL will focus on Kolkata in the initial phase this year.

"We intend to open 35 outlets in this part of the country in the next 18 to 24 months using up a cumulative floor-space of about 42,000 square feet. All the four brands should be in Kolkata by the end of this year," Gama's director Gaurav Agarwala said.

Unitech may issue a billion shares

Hopes to mop Rs 8,500 crore; promoters could raise stake by 5%. Bolstered by the sharp run-up in its share price after the recent private placement, the country’s second-largest realty firm Unitech today took shareholders’ approval to issue up to a billion shares to raise more funds.
At the current market price of around Rs 87 a share, the company could bring in around Rs 8,500 crore through this route.
In addition, the company would raise Rs 1,150 crore through a preferential issue of convertible warrants to promoters at Rs 50 each. Each warrant is convertible into one equity share.
“The real estate market has bottomed out and investors are showing an interest in realty companies. Even though we do not need to raise funds immediately, we want to be ready as the market sentiment is very bullish,” said Sanjay Chandra, managing director, Unitech.
In April 2009, the company mobilised Rs 1,625 crore through issue of fresh shares to select foreign and domestic investors. Of the funds raised through QIP, Unitech used Rs 700 crore for repayment of a part of its debt, which is about Rs 7,800 crore.
“Our sale of assets in the past two months has fetched us more than the expected amount and we expect to mop over Rs 1,700 crore by the end of this fiscal, as against Rs 1,600 crore expected earlier,” Chandra added.
Till date, the company claims to have raised nearly Rs 1,000 crore through the sale of its two hotel properties and a commercial office space in Delhi NCR.
The company also got shareholders’ approval to issue 227.5 million convertible warrants on a preferential basis to promoters at Rs 50 for each. The promoter group will pay 25 per cent of the total amount in the next 15 days. On conversion of the warrants, the promoters’ stake in Unitech will go up by 5 per cent. It is 51 per cent currently.
On the listing of its real estate investment trust (REIT) on the Singapore Stock Exchange, Chandra said the market in Singapore was not good enough to get the desired money through public issue of its commercial assets.
“We were able to raise more money by selling our assets to high net worth individuals and will continue to do so this year. The listing of REIT would take another year,” said Chandra.
The company has booked over 4 million sq ft of residential space in the past two months and expects booking of around 20 million sq ft of space by the end of this fiscal year.

Govt moots for low cost housing

Updated: 16/06/2009 11:39 PM IST Top Stories Govt moots for low cost housing Rajat Guha Tuesday, June 16, 2009 (New Delhi) EMail Print BlogComments: Read (0) Post Rate the story Housing for the poor tops the UPA government’s agenda. The Budget may bring cheer to those looking to buy houses costing less than Rs 30 lakh. In order to revive the demand in the real estate sector, the government is considering the need for cheaper loans for buying houses.
Low cost homes could become cheaper still. The country's new Urban Development Minister, Jaipal Reddy, on Tuesday, met Finance Minister Pranab Mukherjee and proposed that low cost housing should be given cheaper loans.
The rate should be at 6.5 per cent for houses priced below Rs 5 lakh and about 7.5 per cent for houses below Rs 20 lakh.
“We have given our wish list to the Finance Minister. We want loans upto Rs 5 lakh at 6.5 per cent and loans upto Rs 20 lakh at 8 per cent, while loans above Rs 30 lakh be at 7.5 per cent,” Reddy said.
Apart from suggesting cheaper housing loans, Reddy also sought more budgetary allocations for projects under the Commonwealth Games and UPA's flagship scheme for urban renewal.
Now, with banks already forced to cut interests, these new proposals will have to wait to hear the final word from the finance ministry, but one thing is clear that the UPA's ‘aam admi’ agenda will put low cost housing right on top priority.

India 'most attractive' retail market

India still continues to be 'red hot' when it comes to a preferred destination as a retail market. India has reclaimed the top position amongst 30 nations in the results of the 8th Annual Global Retail Development Index (GRDI) revealed by global consulting firm A T Kearney. Low inflation, reduction in rent in smaller cities helped push India's score (68) above Russia (60), China (56), UAE (56), Saudi Arabia (56), the study shows. For the fourth time in five years, India has been ranked the most attractive for retail investment as global retailers including Wal-Mart, Carrefour and Tesco continue to expand in the country.The GDRI helps retailers prioritise their global development strategies by ranking the retail expansion attractiveness of emerging countries on a set of 25 variables including economic and political risks, retail market attractiveness and the difference between GDP growth and retail growth. In 2008, Vietnam toppled India to become the 'most attractive' retail market but tables changed as recession swept through continents. AT Kearney now believes that 'larger and resilient developing countries' such as India are most likely to lead the economic recovery. The global recession has made prime real estate locations increasingly available in many developing markets. It also has made acquisition valuations of many local-market retailers very attractive, says the report.Slower retail sales are causing Indian retailers to delay expansion plans and restructure their operations. But this has opened the window of opportunity for global retailers and many, including Wal-Mart, are continuing expansion plans as Indian consumers grow increasingly affluent, brand conscious and familiar with global retail formats.

Report puts India on top of retail potential index

New York: India has regained its position at the top of an annual rating of countries' retail sector potential that is being released a week after Ikea, the Swedish home retailer, said it was abandoning an attempt to open stores there.
The authors of AT Kearney's 2009 Global Retail Development Index said that India's largely unmodernised retail sector remained attractive to both domestic and international retailers, in spite of government regulations that prevent 100 per cent foreign ownership of retail stores.
"Overall ... the country risk is low and the market potential is still very high, making it the most attractive option for growth," the report says.
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Wal-Mart, the largest US retailer, opened a partly-owned cash-and-carry warehouse store in Punjab last month in a joint-venture with Bharti Enterprises, while Tesco and Carrefour are also planning joint venture stores.
Hana Ben-Shabat, one of the report's authors, said foreign companies including Jean-Claude Biguine, the French hair salon, Inditex's Zara and Arcadia's Top Shop were also developing arrangements to establish their brands with Indian consumers.
"Maybe the model won't be owning the establishment, but getting the brand into market place," she said.
AT Kearney argues that the economic recession has increased the opportunities for cross-border investment by those retailers who are still generating significant cash-flow as a result of the depressed costs of assets and real estate.
India remained ahead of both Russia and China in the index, and pushed Vietnam out of the number one slot amid concerns about the impact of the global recession on Vietnam's export-based economy, and the collapse of the country's real estate bubble.
But the report notes that Vietnam will allow foreign companies 100 per cent ownership of food retailing from January.
Ben-Shabat also noted that in Russia the impact of the slump had reduced the potential cost of assets, increasing existing interest in deals and acquisitions of a number of significant players.
In China, in third place, the report notes increased foreign interest in smaller format convenience stores, rather than the supermarkets and hypermarkets.

Budget 2009: Govt should provide stimulus to real estate sector

Although, Indian economy as a whole has largely been insulated against the global economic slowdown, the Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector. Demand dynamics of one large industry decide the fortune of its ancillary industries. The ups and downs of the real estate market have serious implications on companies whose future is linked to the housing and infrastructure demand in India.
The risk straddle includes industries such as furniture, granites, ceramic tiles, paints, power cables, glass, electrical equipments and interior designers among others, which exemplifies the significant backward and forward linkages that the real estate sector has with the economy. There is a need for the Government to provide a stimulus for the industry so as to revive this ailing spectrum of sectors. And what better time can there be, than the forthcoming budget!
Some of the measures that should be taken by the Government are as follows:
• Given the demand for and emphasis of the Government of India on affordable housing (through lower interest rates on loans upto Rs 30 lakhs) there is a need to reintroduce tax holiday under section 80IB for housing. • Tax holiday available to hotels under section 80ID to be extended 10 years from existing time limit of 5 yrs. The gestation period in hotel industry, itself, stretches from 4 to 5 yrs. • To garner resources for providing liquidity to the Indian real estate industry, there is a need to: o Re-introduce 'tax pass through' status for domestic venture capital funds that invest in the Indian real estate sector; o Clarify that the Real Estate Mutual Funds are to be treated as equity oriented fund; o Extend the external commercial borrowing scheme to the entire Indian real estate sector including Special Economic Zones and not just 100 acre township, hotels, hospitals in view of the moderate international costs of borrowing; • Encourage states to reduce stamp duty to 5 percent and to provide a system of credit for each stage of sale i.e. levy on value addition. • Increase in deduction available under section 24(b) to Rs 300,000, against, existing limit of Rs 150,000 for self occupied houses. • Increase the basic exemption limit under provisions of Wealth tax Act to Rs 50 lakhs against existing limit of Rs 15 lakhs keeping in perspective the price of property, etc. • Service tax provisions should be amended as follows: o It has been clarified that no service tax should be levied in case pre-construction sale of residential complex where the seller and the buyer enter into an 'agreement to sell'. Similar clarification should be issued for pre-construction sale of commercial complex. o Service tax on renting immovable property should be abolished • To reduce the cost of procurement of capital equipments for construction purposes there should reduction/ rationalization of customs duty (exemption from special additional duty) and excise duty (8 percent to 4 percent)
In summary, the above measures would go a long way in providing much needed succour to the Indian real estate sector in these difficult times.

Demand for homes inching up, but recovery likely to take months

Home sales in India are trickling back in some sections of the market, but industry watchers say a rebound is months away as buyers await further price corrections.
Builders have begun new projects after a year-long hiatus, and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch.
“While the market has turned up, I don’t expect it to be back to 2007 or 2008-beginning levels for another six months or eight months,” said Rajesh Goenka, chairman, Axiom Estates, a real estate agency servicing overseas Indians, mostly in the earning bracket of $100,000-300,000 (around Rs47.5 lakh-Rs1.5 crore) a year.
Indian realtors have spent months battling a severe cash crunch as high interest rates and a slowdown kept buyers away and funding from investors dried up. But, a spate of interest rate cuts and a sentiment revival have encouraged builders to focus on middle-income buyers by launching new projects or re-marketing older ones as mid-income properties.
Unitech Ltd, Parsvnath Developers Ltd and India’s top listed real estate firm DLF Ltd redesigned projects and cut costs to appeal to a wider consumer base. Demand is swaying towards affordable housing. 
In the quarter to March, half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Leases Foras Real Estate Rating and Research.
Even though builders say new projects are being lapped up, home loans are not picking up as fast, suggesting that the homes were picked up by investors, said Pankaj Kapoor, founder and chief executive, Leases Foras.
Homebuyers say that the ground reality hasn’t changed much. Prices haven’t fallen as anticipated with builders’ standing guard, hoping prices will continue to firm and investors, too, hope for a return in pricing.