India most attractive market: Emaar chief

Mohamed Bin Ali Alabbar, chairman of Dubai-based real estate major Emaar, finds India as one of the most attractive markets and would continue to invest in the country through its joint venture company Emaar MGF.

Emaar, which is a listed company with 68% public holding and the rest with the Dubai government, has invested around $1 billion in India so far. Alabbar said that the continued growth even during the period when the global economy was facing one of the worst financial turmoils proves the strength of the Indian economy.

Besides United Arab Emirates, Emaar is operating in 16 countries including US, UK, France In Canada. Its JV company Emaar MGF is presently planning to tap the capital market in India. Alabbar said that the exercise is mainly aimed at listing the company on Indian stock exchanges, which will bring in more transparency in the company's operations and thereby help in instilling confidence among the various stakeholders including customers in the company.

Talking about the financial crisis, he hoped that it is now over and things will improve. The recently reported financial crisis of Dubai World is manageable and will be contained, he said. "All sectors of the country are performing well," he said.

Talking about India, he said he was pleasantly surprised as the country has returned to high growth radar. He said that Emaar MGF is doing exceptionally well. In fact, he is so confident that he refused to change the company's strategy to delve into the affordable housing segment as most of other real estate companies in the country followed to beat the slowdown in the sector.

"In order to protect its brand, Emaar MGF will continue to build houses for middle and upper-middle segments," he said. He said that his group brings in certain quality and specification with its brand, which is not possible in the pure affordable segment. However, he added that it will provide value for money to its customers.

Even during the slowdown period, he said that his company ensured that no project is delayed. In India, he said that all the projects are on schedule. Despite problems and slowdown, the company is ready to deliver all the 1168 apartments of the Commonwealth Games village. He said all the works have been completed and the delivery is being given to the authority.

Senior citizens' homes emerging as a serious segment of real estate

PUNE: Indian real estate scene is witnessing the emergence of senior citizens' homes as a new market segment as the number of projects and housing stock directed at this section of population is rising fast, a report by real estate advisory firm Jones Lang LaSalle Meghraj (JLLM) has said.

The observation is highlighted in a report Senior housing sector in India: Key Trends,' which JLLM released on Friday. "The status of seniors in Indian market is experiencing a sea-change, owing to their growing cohort size, augmented financial independence and change in mindset. They are no longer considered withdrawn, risk averse and financially dependent. The immense potential of this segment, with its unique needs and promises, offers an array of opportunities to the Indian real estate market," the report said.

Saumyajit Roy, associate vice-president (senior living) at Jones Lang LaSalle Meghraj, told TOI, "Five years ago, there were only about 3 to 4 developers focusing on senior living sector to any degree. Moreover, their focus was diffused and their approach was not as well-researched and need-based, as it is today. In the current context, there are around 14 developers actively exploring this segment."

In India, more than 60 per cent of households are nuclear and 8.94 per cent of the population is aged 60-plus, indicating that the aged are in greater need of support than ever.

According to real estate market sources, the number of housing units being built specifically for seniors has increased four to five fold and the segment is on a growth path. "We estimate the number of units in this segment at about 4,000 now, but the way the segment is growing we expect this number to jump to over 20,000 in three years," said the chief executive officer of a Mumbai-based real estate consultancy firm who did not want to be named.

The report pointed out that while opportunities exist, it is important to comprehend the ecosystem in which seniors exist in India. It is imperative that real estate developers understand and acknowledge the unique requirements of the elderly while catering to the sector. The aged population faces numerous issues, typical of the sunset years of their lives.

"A growing sense of insecurity, craving for companionship, fear of getting obsolete and loss of relevance within the family, increasing physical disability, difficulty to access transport, a need for quality healthcare and geriatric care, complexity in conducting the daily chores of family life are some of the several issues that the aged face today. These, compounded by poor access to government and other support systems, insurance and legal assistance, immobilise them. These nuances of old age need to be thoroughly recognised by the developers," the report has elaborated.

The report underlines that there are rising numbers of seniors who are adapting to the idea of senior living' spending the sunset years of their lives with similar-aged companions and sharing facilities in settings of enablement and security. The report also points out to a recent survey of households with senior citizens which revealed that over 60 per cent found the concept of a senior citizen's club or a senior citizen's association as a viable and practical one. Contemporary retirement homes or resorts have replaced the earlier concept of old age homes, which symbolised the last option for needy and abandoned elderly, it said.

City-based Paranjape Schemes Construction Limited has pioneered the concept in the city with their project Atha Shree (the beginning), which has thus far completed three such projects and has set its sight on other cities and countries to develop retirement villages.'

Another realty firm, Ashiana Housing Limited, is constructing the Rs 200 crore Utsav Lavasa in Lavasa City near Pune. The project will comprise 475 retirement housing units comprising of villas and multiple choices apartments. Manoj Tyagi, vice-president, Ashiana housing, said there is a growing acceptance among discerning Indian senior citizens about retirement homes. He said the residents of the retirement resort will be able to maintain the active, healthy lifestyle that they have grown accustomed to, but with more luxuries like hobby clubs, activity rooms, swimming pool or health club.

Pointers on mutation of property

Mutation is a record in the revenue records of transfer of title to a property from one person to another. The procedure, documentation required and

the fees payable vary from State to State. However, generally, some broad procedures are followed.

Documents required

An application on a plain paper, along with a non-judicial stamp of relevant value containing these details is to be submitted to the Tahsildar of the area:

Name of the area in which the right has been acquired A description of the right acquired The name, parentage and residence address of the person from whom the right has been acquired The manner in which the right has been acquired The name, parentage, residence address of the person who has acquired the right Date on which the right was acquired A copy of the document on the basis of which the mutation is sought - sale deed, Will etc.

Procedure

A proclamation is issued inviting objections to the proposed mutation, specifying the date (not less than 15 days from the date of the proclamation) up to which any objection to the mutation will be entertained. The Patwari submits his report in the prescribed format. The statement of parties is recorded. The contents of the documents are matched with the recorded statements.

If no objection against the proposed mutation is received, it is sanctioned. In case any objection is received against the mutation, the matter is referred to the sun-divisional magistrate of the area. Any party aggrieved by an order of mutation may file an appeal before the Deputy Commissioner concerned within 30 days of the order.

Documents required for mutation

In case of sale deed:

Copy of sale deed Application for mutation with court fee stamp affixed on it Indemnity bond on stamp paper of requisite value Affidavit on stamp paper of requisite value Receipt of up-to-date property tax In case of death: Death certificate Copy of Will or succession certificate Indemnity bond on stamp paper of requisite value Affidavit on stamp paper of requisite value duly attested by notary Receipt of up-to-date property tax In case of death, a copy of the Will or succession certificate is required to ensure there is no malpractice in mutation.

Where the Assessing Officer is satisfied that there is no malpractice in the claim of mutation, only these documents may be insisted on for the mutation:

Death certificate of the original assessee Affidavit together with a no objection certificate from the other legal heirs of the deceased or their successors in interest Indemnity bond containing an undertaking of the executant that he will indemnify the Corporation in the event of a dispute arising from the mutation made on his application Rough site plan showing different portions of the building and the signatures of the persons occupying these portions

In case of power of attorney:

Copy of power of attorney Copy of Will Receipt of payment duly registered by sub-registrar Application for mutation with court fee stamp affixed on it Indemnity bond on stamp paper of requisite value Affidavit on stamp paper of requisite value Receipt of up-to-date property tax

Transfer duty

The prevalent rate of transfer duty on the consideration amount should be paid. Also, for each apportionment, appropriate mutation fee is to be paid. If entire building or plot has been sold, mutation may be allowed on payment of upto-date dues. In case of sale by agreement to sell, mutation will be allowed on payment of transfer duty on prevalent rates. If a part of a building or plot has been sold, mutation may be allowed in the name of the purchaser on payment of up-to-date tax for the portion purchased, Sub-division will, however, not be allowed if the sale is not through a registered document or instrument .

In case of inheritance of a property by more than one legal heir, mutation in the names of all the legal heirs may be allowed subject to clearance of up-to-date taxes by each of them for their respective portions. However, sub-division will be allowed only if physical division exists. The case of each legal heir has to be decided independently regardless of payment or non-payment by others for their respective portions.

Whenever the title of any person, primarily liable for the payment of property tax on any land or building is transferred, the person whose title is transferred and the person to whom it is transferred should give a notice of the transfer to the Corporation. The notice has to be given by the transferor as well as the transferee. If any notice is pending, the liability for the increased rateable value after the date of transfer will be that of the transferee.

As such, the transferee should ensure that either the pending proposals are decided or the additional tax is paid by the transferor. Whenever a transferee presents documents for transfer, a letter is to be issued to the transferor inviting objections , if any, in respect of the claim for mutation . The objections received, if any, should be within 15 days of the issue of the letter. If no objection is received within 15 days, the property may be mutated in the name of the transferee, subject to fulfilment of other conditions.

On the death of the person primarily liable for payment of taxes, the person on whom the title of the property devolves should, within six months of the death, apply to the Corporation for devolution of the property on the legal heirs so that a mutation takes place. The person on whom the property devolves should move for transfer in the municipal records as early as possible . The mutation in the municipal records is for the purpose of payment of property taxes, and it does not mean a legal title for the person in whose name the property has been mutated.

Stamp papers for property to go in UP

LUCKNOW: In a major decision of far-reaching consequences, the UP government has decided to do away with the stamp papers presently required for the sale agreement/sale deed and registration of properties. A blueprint on card for replacing this antiquated method is the introduction of franking machine and e-stamping. The new system is expected to be fully operational in the next six to eight months.

UP got a go ahead for this purpose after the Presidential assent to its recently amended UP Stamp and Registration Act, 2009. The Act, passed by both Houses of state legislature, was waiting for President's nod for the last one month. This was sent back to the state on Thursday after due consideration by the Centre and final approval by President Pratibha Patil.

With this, UP will be the third state in the country to have this system after Delhi, Andhra Pradesh and Haryana. It is now being referred to the state's law department for formulation of detailed rules and regulations for implementing the new system.

Drafted around eight years ago, the Bill could not be made a legislation due to shifting priorities of successive governments. What added to the need for a change was the mega stamp paper scam expose and subsequent arrest of its mastermind Abdul Karim Telgi by Mumbai police in 1991. Starting his shady operation from Karnataka, Telgi's size of the scam was estimated to be well over Rs 20,000 crore. By a rough estimate, UP's approximate loss due to fake stamp papers is estimated to be well over Rs 1,000 crore annually.

The new system is expected to bring much-needed relief from this unwarranted loss

Property titling has to extend to everything

New Delhi: Peruvian economistHernando De Soto has pioneered the concept of empowering the poor with the use of market principles of property titling. This single action managed to blunt the extremist threat in his own country. De Soto was in India recently to participate in a day-long session on inclusiveness, hosted by the Federation of Indian Chambers of Commerce and Industry (Ficci). Alongside, he met Prime Minister Manmohan Singh, senior government officials and politicians such as Congress general secretary Rahul Gandhi. The government will be consulting him to fine-tune its strategy to make the economy more inclusive. The economist spoke to Mint on a range of issues, including his conversations with officials and impressions of Gandhi. Edited excerpts:

What brings you to India this time?

I was invited by Ficci to give a few conferences and to meet a few people in government that had an interest in the sort of things I was talking about. I just met your Prime Minister (on Saturday). We talked about his projects of inclusion. And he felt that I could be of assistance to them during our discussion and if some of the things that we had learnt that worked and didn’t work in the world could be of benefit. So we have agreed that I would write up something to that effect and we will meet very shortly again.

I’ve also had a very good, frank talk with Rahul Gandhi. And I will also be meeting three or four of your ministers, explaining what it is we do, because India very much wants to get into the inclusion programme, and we know inclusion. This time I’ve toured a lot of slums and in Mumbai I was accompanied by the press and they say: “What do you find particular about India?” Well, apart from the fact that I saw much of the scenes I’d envisioned in Slumdog Millionaire, which was of course thrilling to see, the reply is not much. It’s pretty much the same reality.

What gives you the impression that this government is serious about inclusion?

The first thing is it’s an important government. I mean, this is not a government of a Central American country with a population of five million. This is the Central government of a country with nearly 1.2 billion. So the government, I suppose, doesn’t get into a subject unless it is a crucial subject. To me, it is quite clear in my discussions with them that they have identified the problems. Everything I have seen in my talks with your Prime Minister and with all the government officials I’ve talked to or members of Parliament, they’ve got a clear idea where the problems are and I got the feeling that we can contribute.

What are these problems?

They are of various sorts. One of them is how you tackle the issue (of poverty). There are some people who believe that what you should do is give away property titles. That is not the way it works. That’s a Western way of looking at it; the Western world in the 21st century. To make it really simple, if you go to somebody that I have seen in Dharavi and you say I am going to give you security over your home, he will say thank you, but he won’t say much. He’ll take that piece of paper and he will slip it in the desk and not recirculate it again.

Why? Because from what I have seen in Dharavi, he not only has a home, he has an industry. So his question will be, you are telling me that it’s okay to have my home, but you’re not telling me if my industry is okay and you’re not telling me what you’re going to do with taxes. So, you cannot title homes in developing countries. You got to title everything.

Today, in the West you can say that, because you live in one place and you work in the other. But in the 19th century, Americans had industries in their home too. And they didn’t go around just titling homes. They did the whole thing. The first thing, no titling process of homes is going to work unless you include all other aspects of life—commercial, business, identity, credit and you wrap it up. We learnt that the hard way. It doesn’t work.

So what is the solution you will offer?

The discussion we had in Mumbai was how were you able to defeat terrorists in Peru, (for) which I designed a policy. For example, I found out that the Shining Path, the Maoists, were protecting the assets of the poor. How can a group that is murderous get the allegiance of poor people unless it is doing them a service? You have to look for a reason. So I said, if I were Indian, what were the services that they were giving. And you will find out that it is exactly the formalization of everything.

Because the government can’t give it, doesn’t know how to give it—it wants to, but hasn’t yet found out—well, the terrorist groups will give it to them at gun point. And so, anything that you are looking at that you don’t like in India—you want education, you want clean water, you want all sorts of things. The issue is, can you do any of the things that creates the wealth to get that without one way or the other getting property to people and my reply is still—no.

This holistic vision runs contrary to what the government does in practice, which is direct cash transfers that helps it politically. How does this contradiction play out?

Well, you know, I have a good case, because I have thought it out and because I dedicate a lot of time to it. But I still don’t pretend to have a silver bullet. So I’m not saying that what we do is the only thing you have to do. And a lot of the solutions I propose are rather medium- to long-term simply because to identify the assets of everybody is a major issue that requires all sorts of information and incentives in place.

And governments have to, in the mean time, do something to keep the short-term alive. You remember the Keynesian thought that in the long term, we’re all dead. So you have to do something. So, I cannot talk about the Indian government about what it does. All I can tell you is for the medium-long-term, I think from all the people I talk to, I see eye to eye.

What is your impression of Rahul Gandhi?

Oh, I liked him. I felt sincerity, a real concern. All of his questions were, “How do I, how can I, how can the government help assist the poor in ways that we do not know.” Now, that to me is already pretty good because the tendency of anybody who is a politician in such a large country—you’re not just any politician. And especially if you come from a smaller country like I do.

It’s happened to me with Brazilians. When you talk to the highest level, well, I can assure you that (Brazilian President Luiz Inacio) Lula is going to say, “What do I have to learn from somebody who comes from a smaller country.” And so, when you come to a country that is seven times bigger than Brazil, and the person says you may have seen something that we didn’t, I come out well impressed.

You are aware that India has launched a huge programme to give an ID to every citizen.

Absolutely. The general idea behind this is that when you look at developed countries, even say Germany, 130 years ago, it was 50 or 60 little countries. But since then, it has become a country of 80 million and the world’s become a country of seven billion, and there’s just no way we can get to know each other if it is not through documentation. And documentation means identity.

The property system is one of many ways in which you are able to identify. It doesn’t tell you as much about the biometric distance between your eyes and ears, but it essentially tries to tell you a little bit about what you own, what risks you run. It gives you a history of the asset; and because the asset changes hands, it also gives you a history of the transactions and the enterprise. So when you are talking about identity, of course what you want to know is where are the one billion and 100 million Indians and how can I find where they are to help them better... I would consider, as I said before, anything that relates to property formalization or business formalization is a close cousin of identification, because it is essentially about knowing how things relate to each other.

Since your visit to India in 2007, the world has undergone a dramatic reality check on market economics. Do you still believe in the power of the markets?

I asked my friend Chris Cox, over in 2009, who was chairman of the Securities and Exchange Commission, how much there was, of these derivatives. And he brought out a reply in an article saying his estimate is that there were $600 trillion (Rs27,840 trillion today) of them. Now to get an idea what this means, the whole production of the United States—the GDP (gross domestic product)—is $13 trillion. The whole production of the world altogether is $55 trillion. So $600 trillion is nearly equivalent to 12 times the production of the world. That’s a lot of money..., but it’s not written.


But now, we are going to find that truth will be established. I figure, the next two-three years, as all of a sudden everybody starts beginning to understand that the recession we’re facing, is basically an epistemological crisis. It’s the lack of knowledge of how much paper there is representing wealth that could be either very deflationary or very inflationary... So I maintain my faith in markets that are ruled by law. When markets are not ruled by law, they become shadow economies. And what is surprising since the time you and I last met, is that I would have expected a developing country to produce the biggest shadow economy. It is the West that has produced the largest shadow economy.

What happens to your thesis of empowering the poor through the power of the markets, when the market itself is undermined in this manner?

It works better than ever. Because what I’m telling you is, look what happens to countries where they don’t have property rights. They get into a crisis. All I’m telling you is, the poor are in a permanent crisis. If the poor had their assets identified, over time, they would become a lot more interesting than even these derivatives. So my argument is that everything that is secure and identified is a lot better than anything that is insecure and unidentified.

Do you believe that market economics are a natural corollary to democracy?

Yes. Very much so. In one case you are accepting political vote, an independent vote; and in the other case, you are thinking of an economic vote, which is, do I buy this or do I buy that? So, I do think that they are complementary. I don’t think that market economics means that there’s one model. There are many models. So you’ve got the Norwegians, who believe in lots of government, lots of government services, generally high taxation, the Nordics generally do it. And you’ve got others like the Americans, who don’t even want a national identification system, they want to be so independent from government.

So within the market economy, you’ve got all sorts of variants. You also have a lot of political variants. The Swiss have seven presidents at the same time. The Americans have a president, the British have a prime minister, but not at all like the Swedish prime minister. So, they all come in different variants. Yet, in each of them there is a degree of freedom of choice.

NRI home loans on the upswing

Most Non-Resident Indians think a lot before investing in property in India and most of the time put off the plan due to the effort, the research and the planning involved.

In some instances, it is put off as they do not have enough funds. For such individuals there is always the NRI home loan.

The Reserve Bank of India defines NRI as 'an Indian citizen who holds a valid Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI'.

Purpose of the NRI home loan

The NRI loans are made available for the following purposes:

* Self-construction of a property on a plot of land.
* Finance the purchase of a plot of land allotted by a society/development authority.
* Renovate/improve an existing property in India.
* Purchase of a house either under construction or on a resale.

Non-Resident Indians are also permitted to purchase an existing house or flat. RBI has not prohibited banks from providing financing to NRIs for the purchase of a second house, but the loan on the house is for the self-occupation of the NRI upon their return to India.

Loans are also offered to NRIs against NRE (Non-Resident External) deposits. These loans can be repaid out of NRE funds but the interest would be charged at a commercial rate.

Loans to NRIs are also provided against FCNR (Foreign Currency Non-Resident) deposits.

Difference between a normal and NRI Loan

NRI home loans can be availed by any NRI with as much ease and convince as any Resident Indian would avail a home loan. However, some difference exists between the two kinds of loans, in terms of tenure, documents, repayment, etc.

Interest rate is little costlier for NRIs than Indian residents, it is 0.25 per cent to 0.50 per cent more for NRIs. The NRI gets the only 85 per cent cost of the property as a loan amount. The tenure of loan is also short: it ranges from 7 years to 15 years.

The size of the loan depends upon the borrower's repayment capacity. Up to 36 times of the gross monthly earnings of the applicant may be issued as loan. However, there is a maximum limit. Calculation of eligibility is same as that of Indians living in the country.

The repayment can be done in equated monthly instalments (EMIs) from the Non-Resident Ordinary (NRO) account or the NRE account.

For security, most banks insist that the first mortgage of the property should be in their name. If the property is under construction then adequate additional security is required such as guarantee of third party (either resident or another NRI).

Tax benefits

NRIs cannot claim tax benefits on home loans in India as they have to pay tax in the nation where they work and earn. However, they need to file tax returns to become eligible for home loans. But if they pay tax in India for income earned in India, they can claim tax rebate for the home loan.

The current scenario

An estimated 25 million NRIs living in 130 countries have remitted $52 billion so far this year (December 2009). In fact India topped the list of countries in remittance flow followed by China and Mexico, according to World Bank report on Migration and Development Brief.

The impact of global slowdown, job losses and unviable job offers has necessitated a section of NRIs to return to Indian shores.

According to housing finance companies and banks disbursing home loans to NRIs/PIOs in Dubai [ Images ], there has been a sudden surge in demand for residential property across Indian cities and particularly for Tier-II cities in the wake of the economic slowdown in the emirate.

Southern cities, particularly Bengaluru [ Images ], Chennai and Hyderabad, are driving the demand though minimal level demand exists for other cities as well. Most of the NRIs keen to invest in real estate back home are looking for home loans as they are unable to get loans locally due to the current tight liquidity situation across the United States.

What experts say?

Experts agree that despite turbulence in mature markets, the 'emotional appeal' of buying a property in India may be stronger now. However, this in turn has created a price increase in the last six months.

Popular property portals claim that the number of queries from NRIs has surged nearly 15-20 per cent over the last two-three months. However, just how many of these 'queries' translate into actual sales remains to be seen, say people behind the business.

The focus on NRIs for these portals is stronger now as many are looking to come back to India apart from those who wish to invest in properties.

Another factor that seems to favour NRIs is the foreign direct investment policy that permits up to 100% FDI from foreign/NRI investors under the automatic route has boosted NRI confidence.

Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of housing finance companies, NRI housing finance plans with suitable repayment options are available.

Easy interest rates on housing finance and the improved lifestyle that developers have created have enabled NRIs to acquire property not only for investment, but also for personal use.

Access to NRI loans: At the door step

The response to the real estate market has been so encouraging from the overseas community that it has prompted housing finance companies to set up branches in countries where there is a high NRI concentration, as in the case of ICICI Bank

The bank has representative offices in Dubai, New York, Bahrain, Singapore and the United Kingdom to tap potential property investors there.

ICICI Bank, Sundaram Home Finance Limited, LIC Housing Finance , HDFC , CanFin Homes, Citibank and a host of other scheduled banks are vying for lending opportunities to NRIs.

However, the final decision on whether the time is right to buy a house, whether to use one's own funds or to take a loan, whether to go for an independent house or an apartment, and which home loan provider to use must be made by the NRI himself/herself after careful analysis.

What this means for the realty market

Builders are looking to make up for the huge losses in the past year or so. With growing NRI interest in Indian properties, reports suggest that the realty prices have rebounded to 2007-2008 levels, which however cannot be good news for people scouting for homes with toned down prices.

This is again an example of how a reaction in one corner of the globe can affect another. Sometime back the same scenario happened with rentals, which shot up with a lot of NRIs returning home to take up jobs in India.

There is a need for reforms in realty: KP Singh

NEW DELHI: Even as the domestic economy is showing clear signs of a pickup, the Indian real estate sector is not out of the woods yet as oversupply of residential and commercial projects will continue to haunt realtors for the next 12-18 months, DLF Limited chairman KP Singh said.

Talking to ET after being awarded the Padma Bhushan, Mr Singh said that the sector will witness consolidation and some players (fly-by-night-operators) may go down under as part of a normal business cycle. “I feel overwhelmed by a deep sense of gratitude and humility. I would like to express my heartfelt thanks to the Government of India for this great honour and for recognising my lifetime work. I consider it a tribute to all those who have supported us in the mission of building a new India. This is recognition for the entire housing and construction industry”, he said on receiving the honour.

While appreciating the government for not allowing the liberal flow of funds in the real estate sector, Mr Singh said that the government needs to give importance to this sector as it is one of the largest employment generators and is considered a major engine of growth. “For growth of India, realty is an important sector as it contributes substantially to the GDP and is also one of the biggest employment generators,” he said.

Key facts about India's property market

More than a dozen Indian real estate firms have lined up plans for initial public offers to raise about USD 6 billion, buoyed by an 81% rise in the Mumbai stock index last year and as property buyers return.

Following are key facts about India's property market.

The property market contributes 5-6% to India's gross domestic product, or about USD 50 billion annually to the USD 1 trillion economy, Asia's third largest.
Total foreign direct investment in housing and real estate in India, since investment norms were first eased in 2005, stands at USD 7.7 billion, including USD 2.2 billion in April-November 2009.

The Bombay realty index underperformed the main index last year, rising 70% after a slump in the first quarter, versus the market's 81% gain.

The major cities of Mumbai, New Delhi and Bangalore have the most expensive residential property in India, with rates comparable to New York, London and Tokyo, due to limited land and the government's push to develop its services industry. Apartment prices have risen by around a third in some parts of India since hitting a low in the 2009 first quarter.

The government, wary of an asset bubble forming, has warned that banks should be more cautious about risks in lending to property developers at low rates. However, little has been done yet to actually curb lending.

India is in need of a clearer property policy to better develop the sector, analysts said. Since 2007, the legislature has been drafting a bill to regulate the real estate market, but has met with resistance by developers and industry lobbies.

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.

Real estate bookings outnumber deliveries in India; 10 to one

It's been long that we have heard of any possessions of the housing projects. Or is it that only launches of projects make news? "Yes , only
launches make news, which is relevant only to real estate developers to attract gullible buyers. How many times have possessions made news? Never" , said Manoj Thaldi, a prospective flat buyer to FINANCIAL TIMES. Manoj is looking for a project nearing possession.

Apparently, it's time only for new launches and no possessions (read delivery of goods promised in the contract). Let's take the most recent example of the Amrapali Group, which announced the launch of its new project Amrapali Zodiac, last week. About a couple of months back, it had announced Amrapali Empire. It's not just to do with Amrapali, other real estate developers like DLF, Vipul, Pearls, BPTP, Mahagun, Omaxe, SVP and Assotech - all fall in the same league. Omaxe and Assotech have announced about two to five projects in past five months in NCR and prominent cities of India.

Good news, so far, is for the customers of the Meriton Group; the developer soon promises to give away possessions. "We will hand over the flats of the Orange County project in Indirapuram to the flat owners, maximum by April 2010, which will exclude condominiums" , said Avnish Agrawal, one of the directors, Meriton Group, ABA builders. Though like any other project, Meriton Group's two projects - Orange Country and Olive County are also running behind time by about eight to 10 months.

Rohtas Goel, CMD of Omaxe, promises to deliver Grandwoods Noida, Omaxe Heights Faridabad, Omaxe City Sonipat, Omaxe City Bhiwadi, Lucknow, PDA OmaxeCity Patiala, within the next six months.

Ashiana is one of the builders in NCR, which is always praised amongst its buyers, for timely delivery of its projects. "We have always delivered our projects within time. The last one we handed over was Ashiana Upvan in Indirapuram and the one nearing possession is Ashiana Palm court in Raj Nagar Extension, Ghaziabad. We will start giving the possession from June 2010", Rohit Raj Modi, director Ashiana Homes Private limited and spokesperson Raj Nagar Extn NH-58 .

While the SVP Group's two projects - one Gulmohar Greens in Mohan Nagar and other Gulmohar Towers in Ghaziabad are nearing possession too. They too are running behind time by four to eight months. "We will give possession of Gulmohar Greens' flats by March 2010 and Gulmohar Towers' flats by April 2010," said Sunil Jindal, CEO, SVP Group.

Notably, when buyers book flats, builders promise them possession before time, which never happens . Also, they promise compensation if the project gets delayed. But do the buyers actually get compensation ?

"I am heading for possession of my flat in Indirapuram, which has got delayed by a year. Apparently, the builder is only talking about the registration money and last five per cent payment. He doesn't want to touch the topic of compensation. We won't even get it if we will not fight for it" , said Ganesh Sharma, a flat buyer.

Yes, even builders forget the compensation topic if a customer doesn't bring it into notice and fight for it. "Every builder company has a clause to pay and compensate its customers if a project is delayed. If the customer asks we do pay him/her compensation, considering it as a penalty on our part" , admitted Jindal of SVP group.

Facilities management is the next big thing in real estate space

Mumbai/Bangalore: When Jasmer Puri started his company 16 years ago, he used to shy away from telling his friends about his business. Having built Dusters Hospitality Services Pvt. Ltd into a Rs100 crore facilities management services firm, Puri no longer has reason to be embarrassed.

Facilities management refers to the maintenance and care of commercial or institutional buildings such as hotels, resorts, schools, hospitals or office complexes. The services include maintenance of electric fittings such as air conditioners and lighting systems, plumbing, cleaning, housekeeping and security.

With overseas companies increasing their presence in India, the real estate sector undergoing a revival and a growing emphasis on urban development and modernization of office spaces, the business is set for rapid growth, making it attractive for investors.

India’s facilities management market is valued at an annual $3.3 billion (Rs15,411 crore) and is expected to grow at a yearly rate of 25-30% over the next three-four years, according to consulting firm Netscribes (India) Pvt. Ltd.

“It is the biggest growth business in real estate spectrum in years to come,” says Anurag Mathur, managing director of Cushman and Wakefield India Pvt. Ltd, a commercial real estate services firm.

Dusters Hospitality Services counts the Taj and Marriott hotel chains, Four Seasons Hotel and JPMorganChase and Co. among its clients and has a presence in 15 Indian cities. Last month, the firm received Rs35 crore in funding from private equity firm TVS Capital Funds Ltd.

Other investments in this space include India Equity Partners and Beacon India Private Equity Fund’s investment of $33 million in A2Z Maintenance and Engineering Services Pvt. Ltd in October.

“As the property market grows, it will be difficult for the in-house management to handle FMS (facilities management services),” says Naushad Panjwani, executive director, facilities management, and project management, Knight Frank India Pvt. Ltd.

Such activities as housekeeping and maintenance services would be increasingly outsourced to service providers that are able to offer economies of scale and a cost advantage. FMS firms also deploy their own machines and equipment, ruling out the need for a client to buy anything, says Hanmant R. Gaikwad, founder of BVG India Ltd, an FMS firm.

“The advantage of outsourcing the FMS to these organizations is that they can service my needs all the time and I don’t need to worry about replacing people when they are on annual leave or they quit,” says Ranjit Deval, manager of administration at the Pfizer India Ltd office in Mumbai, which outsources its FMS to Knight Frank.

BVG, which received Rs40 crore from the Kotak Private Equity Group (KPEG) in February 2008, handles the facilities management for Rashtrapati Bhavan, Tarapore nuclear power plant and Hindustan Unilever Ltd.

“We were looking at infrastructure-services-related firms as a play and we clearly saw an opportunity in who was going to maintain all these places. We started looking at all the players in the FMS space and zeroed in on BVG,” says Nitin Deshmukh, chief executive, KPEG.

To be sure, FMS firms have no shortage of competition in a sector where entry barriers are low. Around 1,000 firms are competing for a share of the market in India, according to Netscribes. Local service providers often do not comply with statutory regulations, giving them a cost advantage over the organized sector, according to the consulting firm.

Meanwhile, realty firms are beginning to see FMS as a part of their main business. Anuradha Gandhi, business head, Property Solutions India Pvt. Ltd, the FMS business division of real estate firm Kalpataru Group, says, FMS is a natural extension of the core business of property development.

“It adds value and brings great edge to a company. If a property is not maintained well, its value goes down on its own,” says Gandhi.

NCR, Mumbai record strongest demand despiteNCR, Mumbai record strongest demand despite hike in prices hike in prices

The real estate sector has underperformed the Sensex by 16% in the past one month on concerns of the Reserve Bank of India’s (RBI) hawkish stance towards the sector and likely increases in mortgage rates. Our analysis of Mumbai’s apartment registrations data reveals that demand remains strong despite 5-30% rise in prices in the past five months. Thus, while prices in many pockets in the city are at their lifetime highs, registrations in October were the highest in almost two years. This leads us to believe that residential demand in metros has strong tailwinds and is unlikely to be affected materially by a small increase in mortgage rates. Our top picks are DLF Ltd and Housing Development and Infrastructure Ltd.

RBI increased the risk weightage on commercial real estate lending by 100 basis points (bps), which is likely to result in a 50-100bps increase in borrowing costs. Mortgage rates could also come under pressure, owing to inflation-related concerns. Headwinds of higher prices and mortgage rates are likely to weigh on real estate demand.

However, October was the strongest month in almost two years: Apartment registrations turned in strong numbers for the fourth straight month in October. Registrations during July-October were the highest since January-April 2007.

We believe a 50bps increase in mortgage rates will have marginal impact on affordability. This, in our opinion, is unlikely to have a meaningful impact on demand. We prefer developers with city-centre-oriented projects in Mumbai and the National Capital Region—the two metros that have recorded the strongest revival in demand.

ICICI Bank to focus on home-loans as real estate picks up

The country's largest private bank, ICICI Bank, today said it is focussing on the home-loan segment as the real estate segment is witnessing a comeback after the economic slowdown.

"We are focussing on the home-loan segment at the moment as there is a lot of activity in this sector (home) ... people who stopped buying a few months ago, are back again," ICICI Bank's Managing Director & CEO Chanda Kochhar told reporters here today.

The bank had recently launched a home-loan scheme under which 8.25 per cent interstate be fixed for the first two-years for loans sanctioned from December 1, 2009 to January 31, 2010, irrespective of the loan amount. The first disbursement of the loan should be availed before March 31, 2010.

From the third-year onwards, the Lender would charge a floating interest rate depending upon the then prevailing floating reference rate.

NIREM takes initiatives to develop human resources for Indian Real Estate

With the meteoritic growth in real estate sector during last few years, the property and real estate business also became more complex in structure and more international in scope, which created the shortage of trained real estate professionals. Then, the industry recognised the need for specialised real estate education. Also presently, at the taking off stage when real estate in India has again started moving up, Indian real estate requires people who have very strong professional skills across the spectrum of property business, for example, the property and real estate business in India today requires not a sales manager who has experience of selling everything but a sales manager who has studied real estate and is therefore expert in selling properties.

Infact, the Indian real estate industry leaders including top real estate developers, multinational real estate consultants, housing finance institutions etc have repeatedly aired their concern at the total absence of courses in real estate in India. Infact, there is no system of real estate education in India, which is visibly affecting the quality of human resources available to the Indian property market. Also, though real estate is one of the largest employers and there are thousands of vacancies at different levels and in different areas, developers are forced to spend huge time and money on selecting and training candidates from other sectors. Moreover, once trained, these people leave immediately for other opportunities and therefore the cycle of spending time and money on recruiting and training candidates from other sector continues for the developer.

In view of the above situation, IDS National Institute of Real Estate Management (IDS NIREM), www.nirem.org, has launched a one-year distance learning Post Graduate Diploma Program in Real Estate Sales & Agency Management (PGD-RESAM). This is the first such specialised real estate sales & marketing course offered in the country. Property market analysts also attribute launch of this specialised courses to qualitative growth of Indian real estate market and its movement towards next state from the nascent stage.

The course objective is to provide the participants with thorough knowledge and practical skills to plan & execute successful sales & leasing strategies for different types of properties, plan & manage real estate agencies and carry out basic appraisal.

This high impact, industry-driven and employment-oriented program offers both the fresh graduates who intend to pursue a career in real estate and the working professionals, an unequaled educational growth and career advancement opportunity. Further information can be obtained from www.nirem.org

Notes to Editor

About the Institute:

IDS National Institute of Real Estate Management (IDS-NIREM) has been established by 'The Industry Development Society for Real Estate', which is a real estate sector development and promotion body. NIREM is planned as a Centre of Excellence in Real Estate Education, Training, Consulting & Research. The institute is mandated to provide degree, diploma and certificate courses in addition to MDPs, Consulting and Research in different areas of real estate.

In addition to Learning & Capacity Development Initiatives, IDS-NIREM, aims to develop benchmarks for real estate sector, provide with comprehensive market data to end-users, retail & institutional investors and other stakeholders, facilitate simplification of asset acquisition and investment process, promote adoption of international standards including the financial and other disclosure norms, best practices and corporate social responsibilities etc.

IDS National Institute of real estate management is India's first real estate institute that offers courses in real estate in the following areas:

1. Commercial Real Estate
2. Real Estate Finance
3. Real Estate Sales & Agency Management

Apart from the above, Post Graduate Diploma courses in real estate management, development, real estate marketing, real estate finance, real estate investment, valuation & appraisal etc shall be introduced in next few months. These courses are aimed at developing potential candidates for different careers in real estate. A unique feature of IDS National Institute of Real Estate Management is that it provides a platform to start career in real estate to both-the fresh graduates and the experienced professionals already working in real estate and/or allied sectors.

Godrej to build India's first green township in city

Godrej Properties Limited (GPL), a real-estate arm of conglomerate Godrej Group, will launch indias largest green township in january.
The eco-friendly project is coming up near Nirma University on Sarkhej-Gandhinagar road.

Adi Godrej, chairman Godrej Group, said that GPL has inked MOU with Clinton Climate Initiative (CCI) programme for the Ahmedabad township project to be developed in a joint venture with local partner Siddhi Group on about 225 acres of land.

Godrej was in town for the company's forthcoming IPO. Interestingly, Godrej Garden City' (GGC) is one of the 16 real-estate projects in the world selected by CCI, for climate positive development. Godrej group is also founder member of Indian Green Building Council (IGBC). The company will avail green building ratings for GGC from leading agencies.

The project will completed in a phase manner over next ten years, ending with 20,000 dwellings in the price ranging from Rs 20 to 35 lakh during the initial phases. However, the company also plans to build smaller flats worth Rs 10 lakh in the later stages, he said. The work for the first phase is expected to finish in the next two years with 500 dwelling units, mostly two and three BHK.

Apart from the use of solar power, water recycling and harvesting, GPL would use fly-ash bricks and develop many gardens, including a 10-acres park, said Milind Korde GPL, managing director. Amenities like sports complex, club house, schools, hospitals and high street shopping areas are also planned, he added.

Hyderabad based MP Rao, a green building expert and member of IGBC steering committee, said that as of now there is not a single green-integrated township in the country. In fact, IGBC is working on a draft for Green Neighbourhood Rating System to give ratings to upcoming townships, said Rao.

India's first private metro rail project is down, but not out

The Rapid Metro Rail Gurgaon (RMRG) Ltd -- India's first totally private metro rail project -- failed to get financial closure by November 30, 2009.
It is a Rs 900 crore project owned by IL&FS (74%) and DLF (26%) linking the DLF township in Gurgaon to Noida, covering a stretch of 5km involving six stations.

It was a disappointment for many who wanted this to be the precursor for clearing many other privately funded infrastructure projects in the country.Some view this failure to achieve financial closure with alarm, but there are others who see this only as a temporary setback.

After all, there are many who desperately want to see this project sail through. For instance, those who want Indiaâ's Commonwealth Games in Delhi to be an impressive show want this project to roll on.

It will complement the existing Delhi Metro Rail Corporation's network. Haryana's government too wants it, and has already given its go-ahead. IL&FS -- which has become one of the largest players in the real-estate sector both directly and indirectly (though several affiliates) -- lobbied hard to meet the deadline, as this project allow its investments in real estate to gain value.

It would pave way for IL&FS to become one of the biggest bidders for several other metro-rail projects proposed in India's cities. It would be a desperately needed morale-booster for IL&FS -- after it had burnt its fingers badly in the real estate and other development projects linked to Maytas in Hyderabad (IL&FS is now the majority shareholder of this beleaguered company).

DLF, India's largest real-estate player, also wants the RMRG because it would allow its landbanks and proposed townships in Haryana to get a significantly larger valuation.

So why could RMRG not achieve financial closure?

Not because funds were not available, says one analyst.

IL&FS has access to funds, and even now expects the financial closure to be achieved by March 2010.

The stumbling block was the non-clearance of permissions from the central government where its files have got stuck.

After all, once this project gets cleared, it establishes a precedent for other similar projects coming up all over the country.

It also paves the way towards ending the railways monopoly over the railway network.Today, the only semi private railway lines are those which are port linkages (thanks to the Adani group's Mundra Port).

Then there is the Mumbai Metro. Significant parts of this network are currently being constructed by the Anil-Ambani-Reliance group.

But Mumbai Metro is still owned by the state government, unlike the proposed RMRG.The land over which RMRG's rail lines are to be built is owned by DLF.Hence even the stations that come up will be managed by IL&FS-DLF.

In the absence of any clear policy of how to permit this, the financial closure could not be achieved. But many believe that such a policy should get cleared by the end of this financial year.

Significantly, such a policy is already being discussed in Delhi.It will allow for privatisation of airports, of major stretches of roads linked to real-estate-development-rights, and to the building of more metro rail projects.

This, say economy watchers, is an inevitable outcome of coping with India's infrastructure needs which could require money in excess of over$7 trillion (Rs 350,15,000 crore), several times India's annual GDP of $1 trillion.

The government does not have the money. The private sector can get it, provided it can actually own and run the project. It may be recalled that even the RMRG was to be originally developed by the Haryana government, but it went to the private sector because the state government did not have the funds. Ditto for several power projects across India.And ditto for several first class ports as well.

Backing such a policy are the ministries of roads and aviation. The Planning Commission
too is in favour of clearing such projects. Kamal Nath, Union minister for roads and highways has gone on record stating his preference to award large stretches of roads and highways to parties who can fund it themselves by earning money from real estate and development on either side of the roads.

This would effectively make the private sector mini-municipalities for some years, allowing them to introduce well-planned urban infrastructure, with suitable linkages. Praful Patel too has been lobbying for such a policy for allowing at least 200 private airports to come up across India.

Obviously such a policy, mooted by both ministries will require provisions permitting both land acquisition and protection from abuse of pricing (because all public utilities are essentially monopolies).

At the same time, fearful that they might lose clout, many elected representatives would
be reluctant to favour such amendments. But given India's desperate need for funds to finance both infrastructure and the creation of new jobs, the passing of such policies is likely to be just a matter of time.

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.

Dubai property recovery under threat

The fear of government-owned Dubai World reneging on its commitments to global lenders is expected to find an echo in a reversal of a recent tentative recovery in Dubai's real estate values unless the emirate manages to strike some sort of deal with creditors and / or somehow raises the cash to meet its obligations, analysts and industry professionals said on Sunday.


The ports, property and hospitality conglomerate last Wednesday asked its creditors for a six-month standstill period while it restructures its debt obligations. Dubai World has borrowed $59 billion to finance its expansion, including the acquisition of port, retail and leisure assets and the setting up real estate ventures globally.

"Unless there is some agreement with creditors on the $10 billion or so that is due in the next two months, I see an indirect perceptional impact on property values in Dubai, maybe even sending them spiralling downward again," said Ashutosh Maitra, one of the partners at a Dubai-based property marketing firm.

This would have a direct impact on the Indian investors in the emirate's real estate sector, who constitute the largest number of property buyers followed by Britons. In real terms, however, such an impact would further push back the possibility of a profitable exit.

An economist attached to an asset management firm at the Dubai International Financial Centre, or DIFC, added: "Such an impact is only likely if there is no quick resolution to the Dubai World crisis. And frankly, this seems to be a storm in a teacup. Dubai World is not seeking to renege on obligations, it is simply asking for some time out from paying off the interest while it restructures its commitments."

By the middle of this year, property values had fallen by about 65 per cent in peak advertised prices since September 2008, when a delayed reaction to the global credit crunch hit the market. According to HSBC data, May 2009 saw a slight uptick in agreed prices month on month, indicating signs of recovery. The lender said distressed stock was gradually clearing due to renewed interest as well as some repricing by sellers. "Anecdotal evidence also suggests that foreign investors seem to be back in the market and there are bulk buyers of property for investment purposes," HSBC said.

The research arm of HC Securities said the main catalyst of an uptick is credit returning to the market as mortgage providers raised their loan-to-value ratios, relaxed credit norms and lowered rates in line with a downward trend in the Emirates Inter-Bank Offer Rate, or Eibor, which fell from 3.87 per cent in January to 1.95 per cent in October.

After dropping to a two-year low of seven per cent and six per cent, mortgage values and volumes as a percentage of total transactions have since steadily recovered to pre-crisis levels, reaching 24 per cent and 14 per cent, respectively, in October. Mortgage volumes have also recorded a strong growth, reaching a two-year high of 374 units in August, as prices drop to attractive levels, only to back-pedal to 191 units in October.

However, a number of factors are likely to keep the recovery fragile. According to HC Securities' own research, 60,000 residential units are likely to hit the market between 2009 and 2011, putting further pressure on prices.

At the same time, rental returns will continue to stagnate or fall marginally as uncertainty over the business environment keeps the expatriate population lower than in recent years. Several rounds of lay-offs by large and small corporations have resulted in rents in most parts of Dubai coming under intense pressure in the past 18 months, making property investments less attractive than they used to be in the glory days of 2002 to 2007, when so-called "flippers" -- investors who bought property with a 10 per cent down payment, only to sell it one or two months later for a 100 per cent return on investment -- made massive amounts of cash.

Asking rentals in Dubai have retreated for 10 months in succession since the start of the year, dropping more than 40 per cent year to date. Occupancy levels have been driven down by expatriates leaving and new stock coming into the market. The pace of the decline, however, seems to be slowing, according to HC Securities, with rent values declining only two per cent month-on-month in September and October.

Advertised rentals on agreed sale prices resulted in yields that are higher, upwards of 10 per cent in October. Considering there is a large bid/ask spread on prices, HC Securities believes rentals are no different and estimates that agreed rental yields have compressed from a high of 8.6 per cent in November 2008 to around 5.7 per cent in October 2009.

On the other hand, this is making life easier for tenants, who now have the upper hand in negotiating down their monthly rents. Over the past four months, there has been a large population shift from the traditionally low-rent areas of Dubai into the relatively upper-crust areas where rents have suddenly become more affordable.

Any quick recovery in realty values driven by massive foreign capital, as witnessed in the boom years, will be predicated on global fund managers allocating larger amounts to the Dubai and UAE markets. "I don't see that happening very quickly," said the DIFC-based economist, who refused to be named. "Primary fund flows will be allocated to more developed markets like New York and London -- where there is an established secondary market that facilitates an exit, and where transparent data shows a clear bottoming out. I believe only the high-risk hot money like hedge funds will be allocated to emerging markets."

Also, other real estate opportunities in the Arabian Gulf itself are looking more attractive, according to several property consultancies such as Jones Lang Lasalle and Colliers. One of them is Dubai's own neighbour, the oil-rich UAE capital city of Abu Dhabi, where severe residential and commercial property shortages are keeping prices and rental yields high.

"If the Dubai World debt imbroglio results in pushing property prices down again, it will be seen as the start of the double-dip in that sector. Since perception is everything these days, the worry is the double-dip will result in a W-shaped overall economic recovery for the emirate," said the DIFC-based economist. This would be bad news for real estate buyers in Dubai, who will witness their investments eroding even more before recovering.

"These worries would prove unfounded, however, if the Abu Dhabi Government or the Federal Government takes a hand in helping out the Dubai Government, as they have done on two occasions in the past," he said.

Action on illegal PG properties Chandigarh.

CHANDIGARH: After conducting a detailed survey of unauthorized and illegally paying guest (PG) accommodations in the area, cops at the Sector-19 police station are ready to book and arrest owners of properties who are still not adhering to set norms.

SHO Ram Gopal said the operation would be launched within a day or two in sectors 18, 19, 20 and in Sector 21. He said raids and special checking would also be conducted in the early hours of scheduled days.

Notably, as many as 144 illegal and unauthorized PG accommodations were found during an earlier survey carried out by the Sector-19 police personnel along with members of resident welfare associations.

A senior police official said detailed report of unauthorized PGs was sent to the estate office for further action but nothing was done. Sources said fresh raids would be conducted by four different teams and this time criminal cases would be registered against owners. Action would be taken under Section 188 (disobedience of order promulgated by public servant) of the IPC.

Notably, UT administration has made several guidelines for PG accommodation owners and it is mandatory for property owners to follow these.

According to sources, around 300 PG properties are being run under the jurisdiction of Sector-19 police station comprising sectors 19, 18, 20 and Sector 21.

Majority of these paying guests are college/university students. Inspector Ram Gopal said the earlier survey was a warning to these owners but apparently some of them have not yet started following the norms.